FIVE years in the making and now, the first integrated resort (IR), Resorts World Sentosa (RWS), will begin to open next week.

And to say that Singapore has a lot riding on this would be an understatement.

When the IRs were first given the green light back in 2005, job creation and a boost to the economy had been emphasised as key reasons to accord prominent and valuable development sites to what would essentially be a theme park and an exhibition hall with casinos. About 40,000 jobs were expected to be created indirectly by 2015, on top of the 10,000 jobs created at each IR. Within this period, Singapore’s gross domestic product (GDP) was also projected to grow on the back of about $2.7 billion of value-add generated by the IR effect.

Today, apart from a few detractors, all signs seem to point towards the IR effect really working. Already, the construction and real estate sectors have benefited. Leong Wai Ho, an economist at Barclays Capital Research estimated that both IRs at maximum capacity could potentially add up to 1.7 percentage points to GDP in a given year, higher than the government’s most recent estimate of 0.5 to one per cent.

One reason for Mr Leong’s bullishness is that Singapore, which has historically never been a single-stop destination for tourists, could now change its profile. ‘The broader mix of activities could also induce each visitor to stay longer and spend more,’ he added. ‘Outside of construction, there is a wide range of beneficiaries – from food manufacturers, general suppliers, wholesalers, retailers, Mice (meetings, incentives, conventions and exhibitions), entertainment venues, even banks and our capital markets,’ added Mr Leong.

There are challenges ahead though, and for Resorts World, this may come in the form of the neighbouring competition.

Jonathan Galaviz, an independent travel and leisure sector strategist, believed that it is reasonable to expect that by 2020, there will be several more cities in Asia that will offer integrated casino entertainment. ‘I think most cities in Asia would see a theme park being strategically beneficial to their tourism mix, but stand-alone theme parks generally have very low returns on capital, so investors are usually wary. It’s important for Singapore to begin looking at the next ‘wow factor’ that it must develop to be competitive in 2015 and beyond in Asia’s tourism sector,’ he said.

RWS is expected to roll out new attractions at Universal Studios Singapore (USS) regularly. Phase Two, which includes the world’s largest aquarium, will open next year.

But will it be enough to generate buzz?

‘Theme parks are successes or failures based upon the ability to get repeat visitation over a long multi-year period. There will be a lot of first time visitation in the first year of operation, but keeping the theme park exciting after five years of operation to attract repeat visitors is the key to financial success,’ added Mr Galaviz.

In terms of business viability, much will depend on the revenues generated by the casino. In this respect, Genting Singapore – RWS’s owner – may be in a relatively good position to weather a longer ramping-up period as parent Genting Berhad is flushed with cash.

Melvyn Boey, economist at Bank of America Merrill Lynch, added: ‘Debt covenants won’t be a major issue.’

Still, there are three gaming destinations nearby – Macau, Malaysia and Australia – and all would be loath to give up any share in the gaming pie, including Genting, which also owns the casinos in Malaysia.

Dean Macomber, a gaming consultant and president of Macomber International reckoned that the casinos ‘will do phenomenally well’. But with investment capital being so high – US$4.4 billion for RWS – Mr Macomber said: ‘This makes any source of revenue more critical but particularly so if a large category of revenue is placed in jeopardy of being lost, such as junket players and/or Singapore residents.’

Already, the current financial crisis is expected to have impacted bullish financial projections made earlier when the IR bids were first awarded in 2006.

Can the casinos survive without junkets? ‘What we do know is that Asian junket-driven demand is real and is large. All the metrics would indicate that the resident market is real and large,’ said Mr Macomber.

As the junket regulations were only released recently, it is likely that the IR operators would not have factored in the possibility of low junket support. ‘This means they must do the best they can with what they have, while, if necessary, find alternative sources of revenue/profit,’ added Mr Macomber.

RWS already seems to be on it.

All resorts have Mice facilities but those at RWS are proving to be quite substantial, boasting one of South-east Asia’s largest, column-free ballrooms, 26 function rooms and over 20 indoor and outdoor events venues for more than 35,000 delegates at any one time.

Marina Bay Sands (MBS) has said that it can host 45,000 delegates.

Trevor Soh, director of events organiser Pico Art, said that it is looking to stage events at both IRs. ‘Both MBS and RWS have different exciting offerings and attractions serving the needs and requirements of different events, organisers and participants. To event organisers, flexibility and service levels are very important selection criteria besides price, location and facilities,’ said Mr Soh.

Genting is not so well known as a Mice player but it apparently has a finger in this pie too. ‘Genting has a successful track record in operating leisure resorts with Mice facilities in the region. RWS will be able to leverage on the group’s experience and business network in the region,’ said Mr Soh.

Source: Business Times, 16 Jan 2010

High real estate prices leave limited room for further growth, say fund managers

CHINA’S best-performing stock funds are turning bearish on housing shares after a run-up in real estate that investor Mark Mobius says is far from over.

Shanghai Elegant Investment Co’s Shi Bo and Chris Ruffle, China co-chairman of Martin Currie, said that they may sell property-related shares as the government clamps down on lending to prevent the economy from overheating. They are buying retailers, healthcare companies and medical equipment makers.

‘Property prices are already very high so there’s limited room for further growth,’ Mr Shi, who oversees the equivalent of US$1.5 billion, including a fund that was ranked first among the 678 China-based funds tracked by Bloomberg, said in an interview.

‘We won’t see a return to the growth model of yesteryear. The next phase will be a transformative one, led by a shift from manufacturing to consumption.’

China’s central bank took its first steps on Jan 12 to curb lending by increasing the proportion of deposits that banks must set aside as reserves. Property prices in 70 major Chinese cities rose at the fastest pace in 18 months in December, the government said on Jan 14, and new bank loans reached a record US$1.3 trillion in the first 11 months of 2009.

Property is the second worst performing industry in the Shanghai Composite this year and Premier Wen Jiabao has said that the government will use taxes and interest rates to ’stabilise’ the market.

Mr Mobius, who oversees US$34 billion of developing-nation assets at Templeton Asset Management Ltd, said on Jan 7 that he is buying shares of developers because consumer demand will increase and government efforts will not hurt economic growth.

‘The Chinese will act rationally and they’re not going to kill the market,’ Mr Mobius, 73, said in an interview in Singapore. ‘There’s still a lot of savings in China. Prices are high but I don’t see a crash.’

Mr Mobius said this week that he is maintaining his position after the central bank’s actions. The People’s Bank of China raised the reserve requirement by 50 basis points, or 0.5 percentage point, signalling its intention to increase borrowing costs earlier than economists’ predictions in a Bloomberg survey last week.

The central bank last raised interest rates in December 2007.

While Mr Mobius is a ‘very successful investor’, the bet on real estate ‘all depends on government policy’, said Mr Ruffle, whose Edinburgh-based company manages US$19 billion, including a China fund that beat 90 per cent of its rivals last year. ‘The government is keen to restrain the property boom.’

The 33-company Shanghai Composite Index’s property measure rose 103 per cent last year, pushing up the average price-to-earnings ratio to 29 times reported earnings, compared with 14.2 at the beginning of 2009, according to data compiled by Bloomberg. The index has fallen 9.1 per cent over the past month.

Property is now the second worst performing industry in the Shanghai Composite this year and Premier Wen Jiabao said on Dec 27 that the government will use taxes and interest rates to ’stabilise’ the market. Morgan Stanley’s China strategist Jerry Lou said on Jan 5 that a property tax may be introduced this year, predicting an end to the rally for real estate stocks.

Mr Ruffle, 52, said that he is selling some developers, banks, airlines and Internet company NetEase Inc. Mr Shi planned to avoid property stocks after home values increased.

‘Inflation is the number one threat,’ Mr Ruffle said.

Mr Ruffle and Mr Shi are bullish on the prospects for consumer and healthcare stocks even if interest rates rise, saying that the companies will benefit most as the government increases domestic spending to diversify the economy away from exports.

China’s share of global consumption will jump more than fourfold to 23.1 per cent in 2020, from 5.2 per cent in 2009, and overtake the US as the world’s largest consumer market, Credit Suisse said in a report this week.

‘Consumer names will continue to be a market focus,’ said Lilian Co, who manages US$300 million as chief investment officer at Hong Kong-based LBN Advisors Ltd. ‘We expect more government policies to boost domestic spending and possibly tax cuts.’

Ms Co’s China+ Opportunity fund beat 94 per cent of its rivals in the first 11 months of 2009, according to Bloomberg data.

‘Consumers in the richer coastal provinces are likely to spend on seeking a healthier lifestyle,’ said Mr Shi, whose funds gained 110 per cent in the past year.

Mr Ruffle favoured some retailers because they will benefit from rising domestic consumption and are ‘entrepreneurial-type companies’.

The government needs to keep expanding consumption to drive growth, the Cabinet said on Dec 9, as it extended subsidies for purchases of cars and appliances in rural areas.

Source: Business Times, 16 Jan 2010

Official data shows floor at end-2009 after two years of declining sales and prices

SPAIN’S property sector slide showed signs that it was nearing a floor at the end of 2009 after two years of steep declines in both sales and prices, official data showed yesterday.

The number of houses sold in Spain rose 5.3 per cent in November from a month earlier while house prices fell at the lowest annual rate in the fourth quarter since the same period a year earlier.

Spain’s decade-long economic boom, fuelled by cheap credit and soaring property prices, came to an abrupt end last year after the global financial crisis exposed structural weaknesses in the economy that the government is now struggling to correct.

House prices fell 6.2 per cent year on year in the fourth quarter of last year, the Housing Ministry said, compared with a fall of 2.8 per cent in the fourth quarter of 2008 and a record drop of 8.2 per cent in the second quarter.

The ministry’s figures are in line with private property surveyor association Tinsa which said on Tuesday that house prices slipped 6.6 per cent in 2009 year on year.

Property prices in Spain have fallen around 14 per cent from their high at the end of 2007 and while the official data showed the drop in value may be turning the corner, economists said that the sector is still highly overvalued. A Reuters survey in October predicted that house prices would fall a further 7.3 per cent in 2010 and 25 per cent from the peak.

Source: Business Times, 16 Jan 2010

I REFER to Monday’s report, ‘More Singaporeans have weekend homes in Iskandar, Johor’.

Before Singaporeans rush in to spend their hardearned money, consider the following:

Why are the estates gated and fronted by burly guards? Why do they have several levels of security, such as monitoring by closed-circuit TV cameras and former Nepalese army guards on 24-hour patrol?
How long will such security features be provided – three years, five years? After that, what?

Will reliable and efficient medical facilities be easily available, even if I use the property as a weekend retreat?
Singaporeans must also assure themselves that whatever they buy, the property titles are good and legal and there is recourse to arbitration should the buyers face difficulties during and after purchase.
Sometimes, a little scepticism, even cynicism, is good, especially when such purchases involve years of hard-earned money.

Jerry Ng

Source: Straits Times, 16 Jan 2010

THIN, grey-haired and soft-spoken, Mr Ralf Gresch, 44, manager at the Festive Hotel, makes an unlikely Pied Piper as he leads a boisterous brood of children through the plush hotel lobby.

‘You need to find Donkey,’ he says, waving a toy replica of the lovable cartoon character from the Hollywood animated blockbuster Shrek.

Instantly, half a dozen children forage under sofas and peek behind curtains in search of their grey, grinning friend.

‘Hey, I found one,’ shrieks a bespectacled 10- year-old. ‘Me too, me too,’ shout others.

The children were having a great time at the soft launch of Resorts World Sentosa’s (RWS) hotels last weekend, experiencing the hospitality on offer at Festive Hotel, one of the three hotels providing very different guest experiences.

For them and their parents – friends and family of RWS employees – the mood was one of childish high jinks and good cheer as they made the most of their free run of a brand new hotel.

The atmosphere at the Hard Rock Hotel next door was a tad more grown-up, with guests getting a glimpse into the lives of famous rock stars. Bruce Springsteen blared from the speakers and rooms were adorned with haunting black-and-white photographs of rock stars through the ages.

In contrast, elegance and sophistication ruled at Hotel Michael, with art aficionados marvelling at the angular designs of famed American architect Michael Graves, the designer of everything at the hotel – including the restaurant’s cutlery.

All three themed hotels – plus the elite invitation-only Crockfords Tower facility – will officially open their doors to the public on Wednesday. And a further two hotels are planned – Equarius and Spa Villas – to open at a later unspecified date.

When all are up and running, the resort will have a total of 1,800 rooms. Mr Roger Lienhard, vice-president of food and beverage and rooms at RWS, says visitors will be spoilt for choice.

‘Each one offers a vastly different experience in terms of design and ambience,’ he says.

Whatever style of accommodation is selected by visitors, they should be sure to enjoy a high level of service from staff. The Festive Hotel’s Mr Gresch insists that wherever staff are they will be ‘friendly, humble and always at your service’.

Their attention is focused on detail. For instance, a key task of every staff member at his hotel is to ensure children are given special treatment.

Over at Hard Rock, pleasing customers is also high on the agenda.The hotel’s manager, Mr Peter Wong, 50, who could pass muster as a rock star himself given his turquoise-streaked hair, has a whiteboard listing the service ‘challenges of the day’.

Last weekend, staff were grappling with a unique problem – how to quickly transport birthday cakes from the resort’s central kitchen at Hard Rock to Hotel Michael nearly a kilometre away.

‘We soon realised birthday amenities needed to be stocked at each individual hotel,’ said Mr Wong. ‘All it required was buying a few extra fridges.’

The smooth service and myriad comforts that the range of hotels promises do not come cheap.

Room rates inclusive of breakfast at the Festive Hotel start at $400 a night, at Hard Rock they come in at $450, while at Hotel Michael the base price is $500.

Given that even the luxurious Bellagio in Las Vegas is currently offering weekday rates starting at US$139 (S$195), aren’t the RWS rates a little on the high side?

Not according to hotel industry analyst Robert Hecker, who points out that the RWS prices are pre-discount ‘rack rates’.

More importantly, the ‘demand generators’ contained within the integrated resort make it natural for RWS hotels to charge a premium, said Mr Hecker, who works at consulting company Horwath HTL.

Comparing rates with Las Vegas might not be appropriate, he thinks. ‘Las Vegas is still hurting badly from the recession. And Singapore’s tourism curve is on the rise.’

Source: Straits Times, 16 Jan 2010

KL’s move to double minimum price level may hurt bid to draw foreigners: Report

Foreigners buying houses in Malaysia can acquire only properties that cost a minimum of RM500,000 (S$208,000) from this year, reported local media. Previously, they could buy houses that cost a minimum of RM250,000.

The move by the government to double the minimum price level for foreigners may hurt Malaysia’s campaign to promote the country as a second home for foreign citizens, the New Straits Times (NST) reported yesterday.

Under the Malaysia My Second Home (MM2H) programme, successful applicants will be granted long-stay visas, which allow them to live in the country for up to 10 years.

Applicants below 50 years old must have liquid assets of at least RM500,000 and RM10,000 in monthly income earned from abroad. Those aged 50 and above need to have assets of RM350,000 and a monthly offshore income of RM10,000.

Industry players said the new ruling, which was confirmed by Malaysia’s Economic Planning Unit on Thursday, could dampen the property market.

The new ruling was first announced by Prime Minister Najib Razak six months ago.

Datuk Richard Fong, president of the International Real Estate Federation (FIABCI) Malaysia, said properties outside Kuala Lumpur might be badly hurt by the government’s move.

‘It won’t be so much of a problem for Kuala Lumpur, where properties easily cost half a million ringgit, but in areas like Terengganu and Ipoh…where can you find properties in that range?’ he told NST.

A survey by FIABCI found that half of the properties purchased by foreigners were priced between RM250,000 and RM500,000.

‘So you are really wiping out half of the market by increasing the threshold limit,’ Mr Fong said.

Mr Ng Seing Liong of the Real Estate and Housing Developers’ Association said the new ruling will affect outlying areas like Terengganu and Malacca.

However, chief executive officer Previndran Singhe of real estate firm Zerin Properties told NST that the new policy will not affect the property market, as foreigners are already buying properties worth RM500,000 and above.

About 2.5 per cent of total property investments in Malaysia are made by foreigners, said NST.

In 2008, Indian nationals made up the fourth largest group of residential property investors after those from Singapore, Britain and South Korea, reported India’s Economic Times.

The Malaysian government will hold its first property expo in Chennai, India, from Jan 22 to 24.

Source: Straits Times, 16 Jan 2010

THE roulette wheels at the Marina Bay Sands will not be set spinning for several months yet.

Construction delays have pushed back the opening of the US$5.5 billion (S$7.6 billion) resort by more than three months. Slated to open by the end of last year, punters will now have to wait until April to get access to its gaming tables.

The postponement means it will miss out on the lucrative Chinese New Year gambling season. Competitor Resorts World Sentosa (RWS) could also have a higher chance of locking in local market share – Singaporean residents who pay for a $2,000 annual pass exclusive to one casino.

But coming in behind RWS at the finishing line does not mean being second best for Las Vegas Sands. The parent company of Marina Bay Sands has staved off potential bankruptcy and put a Macau project on hold to focus on its top priority, the Singapore resort. Brushing aside building overruns and soaring project costs, it says that it is the marathon after the opening that matters.

‘We are in it for decades, so the delay of a day or week is meaningless… We’re not going to open until it is right, whether it is delayed or not delayed,’ says Las Vegas Sands chairman Sheldon Adelson, who boldly predicts annual earnings of US$1 billion for the resort.

What the resort loses in time-keeping, it hopes to make up for with panache. When complete, its soaring skybridge will offer breathtaking views of the Singapore skyline. Top celebrity chefs are set to cook up a storm at its kitchens and gaming with Las Vegas flair will be available at its casino.

The vision is taking shape, said the resort’s chief executive officer and president Thomas Arasi. The 14 heavy pieces that make up the 7,000-tonne steel structure of the Sands SkyPark – a 1.2ha aerial park sitting on three 55-storey hotel towers – have been lifted. Hotel rooms up to the 22nd floor have been fitted out, the roofs are nearly finished on the convention centre and the casino, and the event plaza along Marina Bay is almost complete.

‘The spectacular design of Marina Bay Sands is coming alive and reshaping the skyline of Singapore,’ he says. ‘It’s really exciting to see this come together.’

The SkyPark is certainly going to be something of an architectural wonder. It is longer than the Eiffel Tower is tall and large enough to park 41/2 A-380 jumbo jets in. Aside from architectural spectacle, the resort will offer theatrical performances such as the much-touted Broadway musical The Lion King.

And for those more interested in gastronomic delights, there will be a chance to sample the creations of celebrity chefs Wolfgang Puck of Spago restaurant in Beverly Hills, Daniel Boulud of Michelin-starred French restaurant Daniel in New York, Santi Santamaria of Michelin-starred Can Fabes in Spain, and Mario Batali of Italian restaurants Babbo and Lupa in New York.

‘Marina Bay Sands will set a new benchmark in the hospitality sector with the sheer scale of our facilities… as well as our exemplary service,’ adds Mr Arasi. The 2,600-room Marina Bay Sands – which includes more than 93,000 sq m of retail space, a museum and two theatres – is due to open in two phases.

The first phase will see half of the casino, 950 hotel rooms, three restaurants, and part of the convention venues and shopping space commence operations. The remaining facilities will open as part of the second phase 45 to 60 days later, with guest access to the SkyPark slated no later than two months after phase one.

Ahead of the phased opening, business is being drawn to this giant resort, with the Sands tapping into its considerable expertise in the Mice (meetings, incentives, conventions and exhibitions) industry. It has lined up a series of events for the Sands Expo and Convention Centre that are expected to draw over 150,000 people between this year and 2012.

They range from the Industrial Fabrics Association International Expo Asia 2011 trade show – the first major textile event catering for an Asian audience – to an annual conference organised by the Inter-Pacific Bar Association that features former US vice-president Al Gore as a keynote speaker.

Rooms have already been booked by event organisers wanting to use the Sands for their conferences and trade shows, and 40 contracts have been signed with travel agents from around the world to bring in leisure travellers.

This makes Mr Adelson pretty bullish about the resort’s prospects. He is eyeing annual earnings of US$1 billion – way ahead of the US$400 million to US$800 million predicted by analysts.

Such takings will bring considerable spin-off benefits to the wider Singapore economy.

Taken together, the two integrated resorts are likely to contribute between 0.5 per cent and 1 per cent of Singapore’s gross domestic product when fully operational.

The job windfall from this is going to be massive, with an estimated 14,000 employees needed to run the Marina Bay Sands resort and its tenanted shops. And many more will be employed indirectly by suppliers and contractors.

But Mr Arasi is keen to emphasise that the benefits of the Marina Bay Sands cannot be measured purely in terms of dollars and cents.

‘Beyond the numbers and economic benefits, Marina Bay Sands will be a very big part of creating a new mystique and a new buzz in Singapore.’

Source: Straits Times, 16 Jan 2010

Visitors now have fewer reasons to accuse Singapore of being home to only soulless shopping malls and chain hotels.

When German businesswoman Claudia Ionker was searching the Internet for a place here to stay for two nights recently, she chose Wangz Hotel, a boutique hotel in Outram Road which opened last month.

‘I used to stay at those big chain hotels and the experience was so cold and impersonal,’ says the 44-year-old. ‘At a boutique hotel, I’m treated as a first- class guest.’

Wangz is one of a handful of interesting new hotels sprouting across the island.

Mr Brian Patterson, 64, an Australian mining manager, has been staying at the four-month-old Nostalgia Hotel in Tiong Bahru since last month. He says of his experience there: ‘The staff are very friendly and co-operative. The service is wonderful – they offer you free apples, which is a nice touch.’

Apart from attentive personal service, boutique hotels offer unique decor.

Wangz is a 41-room boutique hotel housed in a six-storey, barrel-shaped building previously occupied by offices and a hostel.

Glastech, which is in the serviced office business and is also developing a serviced residence in Novena, bought the property in 2007 to convert it into its first hotel. It is named after the Wang family, which owns Glastech.

Local architecture firm CPG Consultants landed the job of transforming the cylindrical building into a hotel. It was not an easy task.

As an MRT track runs below the building, its original structure has to be retained. The architects also could not increase the load on the building.

Given its round shape, carving out space within the hotel was also more problematic than inside a rectangular building.

In one respect, however, the curves are a blessing in disguise. Hotel manager David Yap, 40, says: ‘The rounded walls make the rooms feel more comfortable as there is no claustrophobic feeling.’

Making the rooms and even the shower stalls in bathrooms feel more spacious are glass windows, some of which are full-length, giving guests great views of Tiong Bahru’s old-world charm.

The view from the hotel’s rooftop bar is even more spectacular – you sip your drink while gazing at the city skyline.

While the service and interiors of the rooms will get the thumbs-up from guests, Mr Yap says it is the hotel’s artworks that make it stand out. The inn commissioned seven local and foreign artists to create 35 pieces of artworks featuring flora and fauna for its interiors.

He says the artworks cost the hotel $400,000 and they are for sale. The hotel will commission the artist to create new works to replace the ones sold.

‘Some guests even pick their rooms because of the artworks,’ he says.

The hotel, whose makeover costs $8million, currently enjoys 20 per cent occupancy. Most of its clients are European business travellers.

Source: Straits Times, 16 Jan 2010

Stellar showing despite plunge last month when just 481 units were sold

LAST year closed on a low note for developers when a slowing market saw only 481 private home units sold in December but overall 2009 was a far better 12 months than many had expected.

Buyers returned to the market, gingerly at first and then at a gallop to snap up flats that were more affordable than in the madcap days of pre-crisis 2007.

Government cooling measures slowed it all down later in the year as reflected in December’s poor sales – down on November’s 601 units and the fifth month in a row of decline.

Yet it failed to take much shine off the year’s stellar sales numbers: A total of 14,725 private home units were bought, just 0.6 per cent short of 2007’s record tally and about 3.5 times sales in 2008.

‘The residential market has proven its resilience by rising above the economic recession in 2009,’ said CBRE Research executive director Li Hiaw Ho.

Developers launched 14,103 new private homes last year, surpassing the previous high of 14,016 units in 2007, experts noted.

If buyers had not lapsed on their options, 2009’s sales would have set a record of 14,991 units.

The Urban Redevelopment Authority’s (URA) monthly sales figures – from which the 14,991 figure is derived – do not include lapsed options.

There’s no escaping the impact of the financial crisis. Caveats lodged show that the dollar value of new homes sold last year is only 63 per cent of that in 2007, Mr Li said.

‘The lower quantum could be attributed to the dominance of mass-market and mid-tier homes in the 2009 basket, compared to 2007, which comprised largely high-end homes,’ he added.

Affordability was a key issue last year with buyers – many HDB upgraders – keen on small units as these have a more palatable price. Some 42 per cent of last year’s sales were in suburban areas.

Developers cut prices and unit sizes which helped meet demand, said Dr Chua Yang Liang, Jones Lang LaSalle’s head of research, South-east Asia.

It was ‘a year of opportunistic buying’ as buyers realised that prices had corrected from the peak levels in 2007, said Mr Li.

This started in the mass-market segment in the first half of the year before filtering into the mid-tier and high-end projects in the second half, he said.

Prices started to rise around the middle of the year. Government data showed that prices, which fell by some 18 per cent in the first half of the year, had rebounded by 24 per cent in the second half.

Increasingly frenzied buying from February prompted the Government to step in in mid-September with measures to take the heat out of the market.

Transactions duly fell, with December the fifth consecutive month of sales decline after transactions had peaked in July at 2,772 units.

With buyers holding back, developers launched fewer units last month. Just 734 were launched, down from 923 in November, according to URA data yesterday.

The best seller last month was Far East Organization’s The Shore Residences, located opposite Katong Shopping Centre. It launched 136 units and sold 79 for between $1,002 and $1,318 per sq ft (psf).

CapitaLand’s Urban Suites also did well in a quiet month, selling 59 units for $2,180 psf to $2,765 psf.

There has been a noticeable pick-up in demand for units priced above $2,000 psf in the second half, though the total number has yet to make an impact.

Overall, the take-up rate of new launches slowed towards the end of last year, said Dr Chua.

He said this suggested that the Government’s mid-September announcement of anti-speculative measures had some effect on demand.

While sales were strong last year, demand, especially in the mass market, has become more sustainable, said Dr Chua.

‘As such, we do not expect further government measures in the immediate to short term unless transaction volume and prices begin to move out of pace with the larger economic recovery again,’ he added.

Consultants expect demand for new homes to moderate to between 7,000 and 10,000 units this year.

CBRE Research is tipping price rises of 8 to 10 per cent, with sales and price momentum to be led by the high-end segment in the first half.

Colliers International expects a more optimistic 12 to 15 per cent rise in prices.

Source: Straits Times, 16 Jan 2010

Near-record 14,725 private homes were sold in 2009, but only 481 of them in December

PRIVATE home sales fell for the fourth straight month in December, sliding 20 per cent month-on-month to just 481 units.

But the market still finished 2009 strongly with a total of 14,725 units throughout the year – about 3.5 times the number of homes sold in 2008. Total home sales were, however, still a shade lower than the peak transaction volume of 14,811 units in 2007.

‘It was a year of opportunistic buying as homebuyers realised that prices had corrected from the peak levels in 2007 – starting with mass-market projects in the first half of the year, filtering into the mid-tier, and then to the high-end projects in the second half of 2009,’ said Li Hiaw Ho, executive director for research at CB Richard Ellis.

Reflecting the reversal in sentiment, the Urban Redevelopment Authority (URA) index – the yardstick for private home prices in Singapore – fell 18 per cent in the first half of 2009 but rebounded by 24 per cent in the second half.

While buyer interest has shifted noticeably to high-end and luxury homes over the last few months, 2009 belonged to the mass-market segment.

Data from URA showed that of the 14,725 homes sold during the year, 6,064 were in the outside central region (OCR), which is a proxy for suburban mass-market locations.

The top two projects were Frasers Centrepoint’s Caspian (712 units sold) and UOL Group and Kheng Leong’s Double Bay Residences (601 units sold).

‘While there was a filtering-up of demand to the mid-tier segment in Q2 and Q3 2009, and eventually to the high-end/luxury segment in Q4 2009, along with the uplift in economic prospects and market optimism, mass-market projects in the OCR continued to dominate market activity in 2009,’ said Colliers director for research and advisory Tay Huey Ying.

Developers launched 14,103 new private homes in 2009, surpassing the previous high of 14,016 units in 2007. The OCR accounted for the most number of units launched.

Sales last year were driven by six months of strong market activity, which saw both launches and sales staying at above the 1,000-unit level from April to September. In July, which was the peak month, both launch and sales volume crossed the 2,500-unit mark.

Strong signs that the sentiments at the luxury segment is recovering is evident from December’s sales figure.

An analysis by Colliers International showed that the number of homes priced between $2,500-$3,000 per square foot surged to 37 units – the highest number of transactions in this price band in 2009 and a marked increase from the five units and 15 units transacted within this price band in October and November 2009.

The bulk of the units sold in this price band in December 2009 came from CapitaLand’s newly-launched Urban Suites. And the most expensive unit sold by a developer was an apartment at Nassim Park Residences, which was transacted at $3,650 psf.

In fact, the number of units priced above $2,000 psf has been increasing steadily over the four quarters in 2009, according to an analysis by Savills Singapore. The firm’s data shows that four homes priced at above $2,000 psf were sold in Q1, 53 in Q2, 165 in Q3 and 283 in Q4.

Looking ahead, analysts said that the private residential market is expected to stay healthy in 2010 with another wave of buying possibly coming after the Chinese New Year celebrations.

‘Going forward to 2010, we expect the demand for new homes to be moderated to a more sustainable level of 8,000-10,000 units and home prices to strengthen by 8-10 per cent through the year,’ said CBRE’s Mr Li. ‘Both sales and price momentum will be led by the high-end segment in the first half of 2010.’

Colliers said that in line with the expected pick-up in activity, home prices in the core central region (which includes the prime Districts 9 and 10, the financial district and Sentosa Cove) are expected to witness the strongest increase of 15-20 per cent in 2010, followed by the mid-tier RCR or rest of central region (8-12 per cent), and then the OCR (5-8 per cent).

But analysts are still holding out hope that the mass market could account for a bigger slice of the pie this year, possibly from H2 2010 onwards.

The buoyant HDB resale market may generate demand from HDB upgraders for mass-market projects in 2010. And mass-market volumes should recover as developers go ahead with planned launches in 2010, said PropNex chief executive Mohamed Ismail.

Source: Business Times, 16 Jan 2010