2010 has the potential to be a vintage year for East Asia in terms of economic and political developments. But if the region’s leaders fail to seize the opportunities, the New Year could see the beginnings of a drift toward nationalism and possible conflict eventually. That would not be simply a missed chance but a tragedy for the region. The United States, which has underwritten the security of much of East Asia in the post-war period while also providing a market that enabled the region to grow economically, is overstretched. This fact would, in itself, justify Asian leaders taking a hard look at the future of their countries in a world where the sole remaining superpower is in a somewhat defensive mood and preoccupied with domestic problems, wars on two fronts in Afghanistan and Pakistan, as well as residual hostilities in Iraq. The retreat from aggressive power projection that characterises the Obama administration has coincided with the advent of a more assertive yet flexible government in Japan, following the landslide victory there of the Democratic Party of Japan (DPJ). This shift reflects the vision of Ichiro Ozawa, architect of the political revolution in Japan. Mr Ozawa saw long ago that Asia in general, and Japan in particular, could not remain forever under the security umbrella of the US. Thus, he built a successful political movement to break the mould of Japan’s US-dependent thinking and to guide the nation towards an alliance with East Asia.

Given these fundamental shifts, the stage is set for the dawn of a new era of regional cooperation in 2010. But the best of sets are of little use unless all the actors play their parts. Japanese Prime Minister and Ozawa-protege Yukio Hatoyama has made his debut with friendly overtures to Asia and now he needs support from the rest of the Asian cast. For China and South Korea, this is a golden opportunity to secure closer ties with Japan at a time when such developments are less likely to create friction with outside powers.

So, East Asia has an opportunity to institutionalise at the political level what is already a fact of life at the economic level: the high degree of interdependence that characterises regional trade and investment relations. This has been the case for a decade or more but the global recession has added major significance to regional economic interdependence. Asia’s trade with the US and Europe remains far below pre-recession levels and is likely to remain so in the foreseeable future. Intra-regional trade, on the other hand, is growing by leaps and bounds. Even if this cannot compensate in absolute terms for the loss of extra-regional demand (for now at least), the signs point to East Asia surpassing the level of intra-regional trade intensity even of the European Union.

But economic integration requires institutional underpinnings, as does security cooperation. Put simply, East Asia can seize greater control of its own destiny in 2010 if only it can demonstrate the will and maturity to make the effort.

Source: Business Times, 5 Jan 2010

Homeowners with the best credit are the next big risk for the US housing market.

An increase in mortgage defaults among prime borrowers in 2009 is likely to accelerate this year, slowing the real estate recovery even as Americans become more optimistic about the economy, said Robert Shiller and Karl Case, the economists who created the S&P/Case-Shiller Home Price Index.

‘There will be continuing foreclosures, and not just sub-prime, it will be prime mortgages,’ Robert Shiller, a professor at Yale University, said in an interview. ‘This is creating a huge shadow inventory of homes that are still owned, but they’re going to be on the market in the next year or so.’

The number of prime mortgages overdue by at least 60 days more than doubled in the third quarter from a year earlier to 838,000, according to a Dec 21 report from the Office of the Comptroller of the Currency and the Office of Thrift Supervision.

Unemployed homeowners struggling to pay their bills will default on their home loans and increase foreclosures, Professor Shiller and Professor Case said.

Employers have cut more than 7.2 million jobs in the last two years, the biggest employment loss since the Great Depression. ‘Unemployment is not respecting income boundaries,’ said Prof Case in an interview. ‘It’s affecting rich people, poor people and middle-income people and they all have mortgages.’

The US may begin to see some signs of a housing recovery this year, he said.

The foreclosure inventory of prime adjustable-rate loans rose to 10 per cent in the third quarter, more than doubling from a year earlier, while prime fixed-rate loans more than doubled to 1.95 per cent, said Jay Brinkmann, chief economist of the Mortgage Bankers Association in Washington. The surge in prime ARM foreclosures is coming at a time when rates are resetting lower, reducing monthly payments, he said.

‘If you have a prime adjustable-rate mortgage resetting in 2010, you probably are going to see your rate go down,’ Mr Brinkmann said. ‘Still, prime ARMs are defaulting at a higher rate because these borrowers were the risk-takers who chose the initially lower payments so they could stretch to get into a house.’

While an increase in prime foreclosures will slow the housing recovery that began last September, it won’t be enough to knock it entirely off-track, Prof Case said. Home resales last November rose to the highest level in almost three years, the third consecutive monthly gain, and the supply of new homes for sale is at the lowest level in almost four decades.

‘That’s taking some of the pressure off,’ Prof Case said. ‘Hopefully in 2010 we’ll see some recovery.’

Source: Business Times, 5 Jan 2010

Developers court investors in bid to redevolop Battersea Power Station site

A gust of wind howls around Battersea Power Station, an industrial wasteland by the Thames whose coal-fired furnaces were once used by the Bank of England to burn millions of pounds worth of banknotes.

A couple of tourists who have ventured off the beaten track around Buckingham Palace stand on tiptoe as they strain to photograph the gargantuan structure over a high screen.

As debt-laden developers face the ruins of recent extravagance, the Power Station – Europe’s largest brick building – is a decrepit symbol of the past profligacy and present pain in Britain’s real estate market.

In World War II, the central bank turned to Battersea to burn £120 million of notes it had not had time to cancel as it introduced a new design against feared enemy forgeries.

Now Battersea must consume much larger sums if it is to remain standing.

The art-deco icon, which won global recognition through appearances in movies such as Stanley Kubrick’s Full Metal Jacket and on the cover of Pink Floyd’s 1977 album Animals, has been derelict for over a quarter of a century.

It has already passed through numerous developers’ hands since stopping power production in 1983 as Britain shifted to oil, gas and nuclear energy.

Developers now are courting investors for a £5.5 billion (S$12.45 billion) redevelopment just as banks remain focused on unscrambling exposure to commercial real estate. The market has shown signs of recovery recently but is still treacherous.

‘The building is likely to suffer major structural damage in five years if full repairs don’t start before then,’ said Jeremy Castle, chief planning director at Treasury Holdings UK, the power station’s current developers, referring to damage sustained after the roof was removed 20 years ago.

‘We need to move fast to redevelop the site because the building is deteriorating quickly,’ he said.

The two-year downturn in Britain sliced almost 45 per cent off average commercial property values.

The Power Station’s owners, who bought it for £400 million in 2006, say its value fell by 15 per cent in the six months to end-June 2009, causing the company to breach terms on some of its loans.

Battersea’s imposing white brick chimneys have been a popular feature of London’s skyline for almost 80 years, but its brickwork is held together by metal straps. Many bankers and financiers say plans to redevelop it are a commercial anachronism in a city obsessed with skyscrapers.

For Nick Collins, English Heritage’s team leader for the east and south London, the listed Power Station is ‘one of the most important buildings at risk in the country.

‘It stands in splendid isolation, it’s seen and known and recognised so easily,’ he said.

Castle’s employer Treasury Holdings is an Irish property firm that controls the Battersea site through a 67 per cent share in debt-laden Real Estate Opportunities (REO).

REO says the debt taken out to buy the station is still performing, but part of it, along with the majority of its loan book, will be transferred to Ireland’s bad bank, or the National Asset Management Agency (NAMA), next year.

The Irish government is paying 54 billion euros (S$108.6 billion) to buy risky commercial property loans with a combined book value of 77 billion euros from banks to clean up the legacy of excessive lending.

Of an estimated £280 billion worth of unpaid commercial property loans in the UK, more than a quarter are tied to poorer-quality assets, a problem also faced by other European countries, according to CB Richard Ellis, the world’s largest real estate consultancy.

Sector experts say until banks have unwound their exposure to commercial real estate – particularly smaller loans taken out by amateur investors which may have gone unnoticed in 2009 – their ability to resume anything close to pre-crisis lending to property investors will be limited.

The process may take five years or longer, they add.

The Power Station is no stranger to controversy. When construction began in 1929 it sparked protest from people who thought it would be an eyesore and damage local buildings, parks and even paintings in the nearby Tate Gallery.

Giles Gilbert Scott, the architect behind the red telephone box and the Bankside power station – now the Tate Modern – was drafted in to boost its appeal for local residents.

The ‘upside-down table’ of four white chimneys, each a third of the height of the Eiffel Tower, was built over a 20-year period to form two separate power stations in one building.

Situated a stone’s throw from a famous home for unwanted pets, the site passed into the hands of private developer John Broome for £1.5 million in 1987 but costs escalated and it was later sold to Hong Kong-based development company Parkview International.

A one-table restaurant atop a 100-m-high chimney was just one idea put forward by previous developers: An indoor theme park and high-class shopping mall have been others that generated little more than critical headlines for the site.

REO’s plans – central London’s largest ever planning application – were submitted in October 2009. At more than double the cost of a previous developer, they include an emphasis on residential and commercial office space including 3,700 new homes and 1.6 million square feet of office space.

Financial crisis had put paid to earlier, more extravagant ideas including an ‘eco dome’ and 300m tower.

Adventurous schemes have long been derided in Britain.

‘Faneuil Hall in Boston city centre was an example of how our American cousins can redevelop a historic building and turn it into a great marketplace,’ said Chris Johnson, managing partner at architects firm Gensler, and the creator of the Gate in Dubai which houses the Dubai stock exchange. ‘You can look at the Piers in San Francisco and see how they have been transformed into a great attraction.’

Part of the problem is that while the Power Station may be very easy to see, it is poorly served by public transport.

‘You can build great things but no one will go to them if it’s too hard to get there,’ said Mr Johnson, whose company is not involved with Battersea. ‘You will constantly keep increasing the cost of the overall project.’

Developers are promising that a surrounding industrial area, one of few pockets of undeveloped land in central London, will by 2020 be transformed into a new business hub similar to Canary Wharf in London’s east, with the extension of the Underground network. The area will also house the US embassy.

‘Previous projects for the Power Station site failed because they underestimated the costs of repairing the existing building, the transport links didn’t deliver the capacity required and they failed to encompass the entire area,’ said Treasury’s Castle.

Local resident Brian Barnes says the economic downturn has, ironically, contributed to the enlarged scale of the latest plans.

Source: Business Times, 5 Jan 2010

US couples in a buyer’s market are purchasing homes before setting a date for the wedding

CHUCK Haberstroh and Jacque Horelik went to high school together in Westport, Connecticut, but they did not know each other then. They met by chance during college, when she visited a mutual friend at Lehigh University, where he was a student. A few years later, they crossed paths back home in Westport and went on a date to a cool pub and restaurant. Things were a bit on and off for a while, but then they began to get serious.

He lived in a house in nearby Norwalk with a bunch of male buddies; she moved to the place next door with her sister and a couple of friends. She started spending all of her time at his place, so she ditched her room and moved in with him. A few months later, they signed a lease on a small apartment of their own.

He was in his late 20s, she was two years younger. They had been together for two years. They made each other laugh, they liked each other’s friends, they loved each other’s company. And so they knew – as everyone seemed to be telling them – that it was time.

To buy real estate.

Two distinct forms of desire – the carnal type and the kind that involves granite countertops – have been known to intermingle, but perhaps never more so than now.

New York and its environs have always been places where real estate can drive relationships, for better or for worse (think of the marriages that have lingered for far too long because neither spouse can afford to move out of the Classic 6). But the peculiarities of the housing market today are leading more couples to ponder the question ‘Should we buy?’ before they settle the question ‘Should we commit?’ Mr Haberstroh, now 30 and a vice-president of CastleKeep Investment Advisors in Westport, said that the market dictated which question he and Ms Horelik tackled first.

‘When the market started to turn in the buyer’s favour,’ he said, ‘we decided we had to take advantage of that.’ On Oct 30, they closed on a three-bedroom Cape Cod-style cottage in Fairfield, Connecticut, with hardwood floors, a front porch and a back deck on a pretty corner lot. They got it for US$430,000, which was US$29,000 less than the asking price.

They had been assuming for a while that one day they would, probably, get married, but for one reason or another the engagement had not happened.

‘My whole thing was with this market, get the house – the one you want and love – first,’ Mr Haberstroh said.

That wasn’t entirely her whole thing. ‘I was itching to get engaged before we bought the house,’ said Ms Horelik, 28, a teacher who works with special education students. ‘Chuck definitely felt the pressure from me and both of our families.’ But, she added: ‘Now I see why he wanted to wait. He saw the prices and rates were dropping, and we realised we may never see such a buyer-friendly environment again.’

Startlingly low mortgage rates

Other couples are also finding it difficult to resist the allure of startlingly low mortgage rates, fallen prices that may be about to turn up again and expiring tax breaks.

‘There are just so many things you can lose out on’ if you wait, said Elaine Matthews, 27, an actress and dancer who is in contract to buy a condominium in Greenpoint, Brooklyn, with her boyfriend of 16 months, Sean MacLaughlin. They hope to close on the property – a brand-new 1,200 square foot ground-floor duplex with a backyard, a deck and a white picket fence – at the end of February or the beginning of March.

Ms Matthews and Mr MacLaughlin, a 31-year-old actor, met while performing with the touring company of The Phantom of the Opera, and have spent most of their relationship on the road, living in hotels.

‘New York rents are very high and you never see that money again,’ Ms Matthews said. She went on to list the benefits of buying: ‘We got a great mortgage rate, 4.75,’ she said. In addition, owners of units in new developments in New York City can take advantage of a programme that phases in property taxes over a period of 10 years. And then there’s the federal tax credit for first-time home buyers, to expire on April 30, which will provide several thousand dollars in income tax relief.

‘We will eventually get engaged and get married,’ Ms Matthews added. ‘We’re kind of like, let’s get this apartment now, then let’s make it official.’ Mr MacLaughlin said: ‘We were talking about getting married and I said, ‘Wait a minute, if we just put off the ring, we’ll get the apartment first’.’

At US$522,000, the apartment costs a good deal more than most rings, but Ms Matthews said that the price was about US$60,000 less than what a similar unit in a complex by the same developer went for two years ago.

One of the most compelling forces motivating many couples right now is the first-time home buyer tax credit, which offers federal income tax relief equal to 10 per cent of the purchase price of a home – capped at US$8,000 – for couples earning less than US$150,000 and individuals earning less than US$75,000.

Pete Flint, the chief executive of Trulia, a real estate search engine, pointed out that people who have never bought a home make up a demographic tending towards the young and unmarried. The credit, a part of the broad economic stimulus package enacted last year, was to expire last November, but Congress extended it until the end of April.

That deadline is lighting a fire under some couples in the serious, or almost- serious, stages of a relationship. They worry that if they don’t act now, they may squander the best property-buying opportunity that they will have for a while. There are also signs (or at least a feeling in the air) that the housing market could be picking up (including word that this may be a good year for Wall Street bonuses).

Mr Flint said that trulia.com had received numerous e-mail messages from unmarried couples asking about the logistics – and wisdom – of buying a home together. Many of the queries are about the first-time home buyer tax credit, and how or whether it can be divided between people whose marital status doesn’t allow them to jointly file a tax return.

(The answer from the Internal Revenue Service: Only one of the two people can claim the tax break if they are unmarried at the time of the sale. It cannot be divided, even if the couple marry later in the year.)

‘Tenants by the entirety’

Real estate lawyers said that there are more complications for unmarried property owners who part ways than there are for married property owners who divorce – and a less clear process for resolving them.

‘By default, our laws are suited for married couples acquiring assets,’ said Luigi Rosabianca, a real estate lawyer in Manhattan.

Under New York state law, he explained, a husband and wife are considered ‘tenants by the entirety’ when they buy property. That ensures, among other things, that the property will automatically transfer to the surviving spouse if one person dies.

‘If you are not married, you have to fill in the blanks,’ Mr Rosabianca said. Towards that end, he recommended that unmarried couples consider signing what amounts to a pre-prenuptial – legal agreements specifying the unknowns, including ‘who contributes what percentage of the expenses, mortgage, taxes, common charges, utilities’. He added: ‘You also have to account for capital gains – what percentage goes to whom.’

And for Mr Haberstroh and Ms Horelik, both the real estate and the relationship have now fallen into place, to the delight of Ms Horelik’s family, who are of the wedding-before-house school.

The first night they slept in their new home, they got engaged. They are hoping for a late-summer 2010 wedding, but have not set the date.

‘Between moving in and outfitting the house,’ Mr Haberstroh said, ‘we’ve had a hard time finding time to really make progress on that front.’

Source: Business Times, 5 Jan 2010

Knight Frank Singapore is reorganising its operations along five lines – advisory, residential, commercial, property management and retail. Each division is headed by a managing director, who will provide strategic leadership to their unit and identify and groom the next tier and next generation of leaders.

The change was made after the property firm reviewed its operations in preparation for the next market growth phase. The aim is create better synergy and promote cross-selling. ‘We want clients to look at Knight Frank as an organisation staffed with pro-active and professional personnel who are best in class,’ said group managing director Danny Yeo.

With the reorganisation, the company has three new managing directors – Lydia Sng, Peter Ow and Foo Suan Peng. Ms Sng was promoted from executive director for valuation to managing director for advisory services; Mr Ow from executive director for residential to managing director for residential services; and Mr Foo from executive director for investment sales to managing director for commercial services. Jordan Neo will continue as managing director for property management services.

The company is also taking steps to renew its talent pool. ‘We will actively recruit talent from the industry, locally and abroad, and provide opportunities for existing staff to stretch and demonstrate their capabilities,’ it said.

Knight Frank has also reviewed its salary structure and incentive schemes to motivate staff to excel.

Source: Business Times, 5 Jan 2010

JTC Corporation has unveiled two new concepts that could optimise land use and promote synergy within industries.

The first involves a giant hoisting system to move bulky goods to a company’s doorstep – even if it is on a high floor. This would allow developers to build taller industrial facilities and intensify land use by at least 20 per cent.

The second concept looks at housing factories, warehouses and workers’ dormitories in a single complex.

With shared driveways and fewer setbacks needed, land take-up could be cut about 35 per cent.

JTC started examining the two concepts last year and expects to complete its study this year.

‘We are looking at feasibility now,’ said land planning division director Josephine Loke. ‘When we are ready, we will share with industrialists to get their buy-in and feedback.’

JTC staff got the idea for the first concept – a cluster industrial complex with mega hoist – from seeing how cranes at ports worked.

They developed the idea and came up with a design that incorporates a huge hoist in the middle of a complex. Factories can occupy one side of the complex and warehouses the other, sharing the hoist and loading bay for moving goods.

The complex could be five storeys, with a plot ratio of 2.5. This is 23 per cent higher than the plot ratio for stack-up factories at Woodlands Spectrum 1 and 2, which is 2.04.

And because there is no need for a vehicle ramp for trucks to transport goods to higher floors, the design saves up to 0.5 ha of land area.

Industries which could fit into such a complex include those in electronics and precision engineering.

The second design is based on a ‘plug-and-play’ concept. A row of warehouses, logistics facilities, car parks and other amenities will form a central ’spine’. Flatted factories and workers’ dormitories will be built on top of this spine.

Industrialists can then ‘plug in’ to this spine by building their own modular factories along it. At the same time, they can share car parks, access ways for moving goods and other amenities.

Locating various facilities together means less space needs to be set aside for internal driveways and setbacks.

This complex can have a plot ratio of 1.5, almost double the 0.85 for a type E9 standard factory today.

Both concepts are likely to be tested at Jurong. JTC is open to letting private-sector developers handle the projects, but it is also ready to take the lead if the projects turn out to be too intensive.

Source: Business Times, 5 Jan 2010

Millennium & Copthorne Hotels chairman Kwek Leng Beng is optimistic Singapore’s hospitality industry will recover this year.

He is seeing improved occupancy rates at his Singapore hotels and expects average room rates to recover soon, he told BT.

And with the opening of the two casino resorts, the local hospitality sector will be transformed, he believes.

The resorts will attract new and different types of visitors and the number of leisure and MICE arrivals is expected to increase, he said.

Many of these people will extend their stay to take in other attractions, so the hotel industry as a whole will benefit.

Mr Kwek, who was speaking during the New Year weekend, also believes all hotels that have been operating for more than two years should be making profits because of their low ‘cost-base’.

Millennium & Copthorne Hotels owns or manages more than 120 hotels worldwide.

Source: Business Times, 5 Jan 2010

Mapletree Log Trust, Ascott Residence Trust are its picks

OCBC Investment Research has laid out three changes it hopes to see in the S-Reit sector for the year to improve corporate governance and transparency, and to yield more benefits to unit-holders.

One of the changes on its wishlist is for a substantial part of manager fees to be pegged to total shareholder return, and less on areas such as asset value and net property income (NPI).

Said OCBC Research’s Meenal Kumar: ‘Historically, S-Reits have relied heavily on acquisitions to grow both NPI and portfolio size, especially with the added kicker of acquisition fees. Depending on the pricing and financing structure, these two metrics can be increased with no net benefit (or even a cost) to unit-holders.’

She added: ‘No fee structure is perfect but we feel this issue warrants further attention and discussion.’

Ms Kumar also called for S-Reits to provide more transparency on their relationship with their sponsors. She said that the sector has a bias towards developer-sponsored Reits, which ‘are inextricably tied to their sponsors on several levels including property management, Reit management and through acquisition pipelines’. The current de-leveraging environment, she said, will see several sponsors sell their assets to their Reits. But while such pipelines can give S-Reits a competitive edge by providing investors with buying access to quality assets, ‘pricing and strategic benefit to the Reit is always a concern’, she said.

It will be good therefore ‘to see increased transparency of the acquisition decision-making process that goes beyond a comparison of the acquisition cost versus the independent valuation of the target property’, said Ms Kumar.

OCBC Research also hopes to see renewed focus on the value-add of proposed acquisitions as it expects Reits to return to the growth-via-acquisition strategy. ‘The market needs to ask harder questions including: Why is the Reit making this purchase? Does this purchase enhance the overall portfolio? What are the strategic considerations behind this decision? Is this a good buy on an un-leveraged basis?’ said Ms Kumar.

On top of laying out changes it hopes to see, OCBC Research also listed its top picks for S-Reits, namely Mapletree Logistics Trust and Ascott Residence Trust. It has a buy call for both plays, with a target price of 78 cents and $1.25 respectively for the two Reits. Mapletree Logistics Trust and Ascott Residence Trust closed trading yesterday at 78.5 cents and $1.28 respectively.

Ms Kumar said OCBC Research likes the valuations for both of these Reits, adding that Mapletree Logistics Trust has earnings stability and makes yield accretive acquisitions. Ascott Residence Trust’s earnings are also likely to increase on the back of the expected return of corporate travellers in 2010, she said.

OCBC Research also maintained its neutral rating on the sector as a whole, citing the sector’s ‘unexciting risk-reward ratio for 2010′. In its report on the sector in December, it stated that S-Reits trade on average at 0.78 times book, still below the 0.89 times average in 2006. It added that the potential 13.4 per cent increase from current levels is offset by book value risk from Q4 2009 revaluations. A 6.9 per cent potential upside from a distribution yield perspective is also offset by a mixed earnings outlook.

Source: Business Times, 5 Jan 2010

Property sales ended the final quarter of last year with a whimper rather than a bang as prices of private homes grew at a slower pace from the previous quarter.

According to preliminary data from the Urban Redevelopment Authority (URA), private residential property prices rose 7.3 per cent in Q4, but this is only about half of the 15.8-per-cent growth posted in Q3 last year. Overall, the property price index increased 1.7 per cent for the full year.

Even with the seemingly moderated Q4 growth rate, this translates to a rise of 18.3 per cent for the index in the second half of last year, a sharp rebound after a dip of 14.1 per cent in the first six months of the year, noted CBRE Research executive director Li Hiaw Ho.

“The good response to selective high-end projects launched in the fourth quarter contributed to this upward surge in home prices,” he added. These projects included Marina Bay Suites, Cyan at Bukit Timah and Parvis at Holland Hill.

Referring to the 7.3-per-cent increase in the price index, PropNex chief executive Mohamed Ismail said it is a sign of “sustainable growth”.

The slowdown in the pace of price increases was most noticeable in the suburban Outside Central Region (OCR) where home prices rose 5.8 per cent compared to 16.1 per cent posted in the third quarter

“This could be contributed by the drop in the number of new major suburban projects launched at relatively high prices,” said Ngee Ann Polytechnic lecturer Nicholas Mak.

CBRE’s Mr Li noted that prices of non-landed homes in OCR have increased by 11.2 per cent for the whole year, outperforming those in the Rest of Central Region and Core Central Region, which rose by only 3.1 and 2 per cent, respectively.

“This is not surprising because some of the mass market and city fringe 99-year leasehold projects have seen their prices cross the $1,000 per sq foot barrier because of their near-city location or if they are near an MRT station,” he added.

Another factor that could contribute to the slow down in price growth was the decline in the level of speculation, added Mr Mak. The proportion of subsales fell from 11 per cent of total transactions in third quarter last year to 10.7 per cent in the fourth quarter, based on current available data.

The Singapore Government introduced measures to curb speculation in the property market last September.

Property analysts say that even with the slowdown in the growth of property prices in the fourth quarter, the figure is not insignificant and indicates that there is still sufficient momentum in the market to push prices to higher levels this year.

“It is projected that by the before the end of 2010, the previous peak in private home prices achieved in mid-2008 could be surpassed,” said Mr Mak.

CBRE’s Mr Li said that more high-end projects, acquired through earlier collective sale activity, are expected to be launched in the first half of this year.

Source: Today, 5 Jan 2010

They rose 7.3% in Q4, while HDB resale prices also continued to climb

Private home prices continued their ascent in Q4 last year, climbing an estimated 7.3 per cent from the previous quarter. This sent prices for 2009 up 1.7 per cent from a year ago, defying bleak prognoses of double digit falls when the financial crisis unfolded.

Resale prices for public housing were also on their way up in Q4, rising 3.8 per cent from the previous quarter. Year-on-year, the index gained 8.1 per cent to hit a record high.

With economic skies clearing, property consultants expect to see further price increases across the property market this year. For private housing, more activity could also come from the prime segment.

‘More high-end projects, acquired through earlier collective sale activity, are expected to be launched in the first half of 2010,’ said CB Richard Ellis executive director Li Hiaw Ho.

Knight Frank managing director of residential services Peter Ow foresees demand returning to the high-end sector, particularly from investors in China and India.

The market outlook has improved sharply from the same time last year.

Then, market watchers worried about the economic downturn and credit crunch were predicting a 10 to 20 per cent drop in the official private home price index for 2009.

That could have materialised if not for an unexpected pick-up in mass-market home sales, which gradually spilled over to the mid to high-end sectors.

In Q3 last year, the benchmark index shot up by 15.8 per cent from the preceding quarter, reversing a year-long decline.

And according to flash estimates from the Urban Redevelopment Authority (URA) yesterday, the index continued to rise in Q4, but at a slower pace, gaining 7.3 per cent from Q3. This brought the index back to a point between Q3 and Q4 2007.

Prices of homes in the rest of central region (RCR) led the growth in Q4, increasing 9.5 per cent from a quarter ago. Prices in the core central region (CCR) and outside central region (OCR) rose 7.1 per cent and 5.8 per cent respectively.

‘The good response to selective high-end projects launched in the fourth quarter contributed to this upward surge in home prices,’ said Mr Li.

For instance, based on URA data for November, 87 units at Marina Bay Suites were sold at a median price of $2,159 psf and 61 units at Espada were taken up at a median price of $2,322 psf.

OCR home prices rose much less in Q4 compared with Q3, when they had jumped 16.1 per cent. Ngee Ann Polytechnic real estate lecturer Nicholas Mak suggested this was because developers launched fewer major suburban projects at relatively high prices.

For full-year 2009, the private home price index notched a 1.7 per cent gain, underpinned by a strong price increase of 11.2 per cent from the OCR region. Prices in RCR grew 3.1 per cent while those in CCR shrank 2 per cent. The index had lost 4.7 per cent in 2008.

Consultants are anticipating larger price increases as the economy recovers. CBRE’s Mr Li believes that residential sales will ‘move at a moderate pace’ this year – 8,000-10,000 new homes could be sold and prices could rise 5-10 per cent.

Knight Frank’s Mr Ow expects private home prices to post an average growth of 10 per cent this year, while Mr Mak foresees a 10-20 per cent increase.

As for the public housing market, the economic whirlwind last year did not stop prices from hiking. Going by HDB flash estimates for Q4, the resale price index reached 150.7 points, up 3.8 per cent from the previous quarter and 8.1 per cent from a year ago.

‘Average prices in the HDB resale flat market continue to gather strength,’ said Mr Mak, attributing this to strong demand from newly-formed families, permanent residents and home seekers who got priced out of the private home market as prices there rose.

Mr Mak believes that HDB resale prices will climb another 8-15 per cent this year, while Prop-Nex CEO Mohamed Ismail tips further growth at 5-8 per cent.

HDB said yesterday that it will offer 1,300 build-to-order (BTO) flats in Choa Chu Kang and Hougang for sale today.

The agency ‘will continue to launch more BTO projects in 2010 if there is sustained demand for new flats’.

Source: Business Times, 5 Jan 2010