Frustrated buyers have pointed their fingers at permanent residents and private property speculators for pushing up HDB resale flat prices to record levels.

They claim the speculators snap up resale flats and then rent them out illegally or sell them quickly but legally after the stipulated one-year period.

A week ago, National Development Minister Mah Bow Tan said the Government is looking into ’something’ regarding measures for the HDB market.

Property experts reckoned the Government could extend the minimum occupation period for those who bought their flats with bank loans as well as make checks to ensure owners are not flouting the rules.

Under HDB rules, those who buy resale flats without housing grants can sell their flats after 21/2 years if they take a loan from HDB, or one year if they take a bank loan.

They can rent out the entire flat only if they have lived in it for at least three years.

Buyers who take up housing grants for their purchases can sell only after a minimum occupation period of five years.

‘Speculation is not an issue right now. But it may become an issue if buyers are sure that prices will continue to rise for the next year,’ said the managing director of C&H Realty, Mr Albert Lu.

ERA Asia-Pacific associate director Eugene Lim said the Government has already started to rein in the sizzling HDB resale market with the lowering of the loan-to-value limit (LTV) for housing loans taken from banks.

This means buyers can borrow less than before – at up to 80 per cent of the property’s valuation instead of 90 per cent previously.

This will likely affect deals for the high-value resale flats involving cash-over-valuation (COV) of anywhere from $50,000 to $90,000, as buyers will now have to fork out more down payment, in addition to the cash, said Mr Lim.

COV is the amount over and above the flat’s valuation that is payable only in cash.

There are not many other things the Government can look at, as it will not want to affect genuine demand, property experts said.

While the lower LTV limit will have an impact, it won’t be big, said Mr Chris Koh, director of Dennis Wee Properties.

‘It is the 5 per cent cash down payment and the COV that the buyers find challenging to come up with,’ he said.

An industry observer suggested that the Government may raise the first-time applicant’s housing grant to buy resale flats.

The Government can also extend the minimum occupation period for those who bought resale flats with bank loans to as long as 21/2 years, though this may not go down well with the banks as this may increase their risk exposure, property pundits said.

‘The banks may not agree to extending the period, but this area needs to be looked into so that people will not look at flats as a quick one-year turnaround investment,’ said Mr Koh.

Mr Lu suggested that the Government ban private property owners from buying resale flats if their sole intention is to rent them out.

HDB flats are in demand as the well-located ones can easily command a rental yield of 7 per cent to 8 per cent.

HDB, he said, can conduct regular checks to see that the private property owners are living in their flats instead of renting them out during the minimum three-year occupation period.

‘This, however, does not solve the problem of private property owners renting out their HDB flats legally after the minimum three-year occupation period,’ Mr Lu said.

HDB owners can buy private property but they must continue to live in their flats.

However, those who have obtained prior approval from HDB to sublet their flats can live in the private property.

Some property experts suggest going back to the days when flats could not be easily rented out.

‘One possible measure is to revert to the old system of allowing HDB flats to be rented out only if the owner has valid reasons such as being posted overseas to work,’ said Mr Lu.

Mr Koh added that HDB flats should not be seen as a short-term investment as this changes the whole concept of government housing.

SUGGESTED CHANGES
~ Extend minimum occupation period for those who buy HDB flats with a bank loan
~ Check to ensure that owners are not flouting occupation rules
~ Raise first-time applicant’s housing grant to buy resale flats
~ Ban private property owners from buying resale flats to use as rental property
~ Revert to old system where HDB flats may be rented out only for valid reasons

Source: Sunday Times, 28 Feb 2010

I am no expert when it comes to investing in property, but as I have invested in numerous properties over the last decade, I have gained some valuable experience.

I made money from some and lost money from others. Some say you need luck to make money in real estate, but I believe there are some fundamentals that one can use as a guide to make as infallible a decision as possible.

1 Good location

In property selection, particularly for investment purposes, the key is location. For owner-occupied properties, location may be less significant as individuals have different preferences. Some like

quieter locations away from commercial activities while others choose to be close to specific amenities.

Proximity and accessibility to schools, transport lines, shopping centres, factories and specific suburbs are some important factors to consider.

Even for an owner-occupied property, it is important to consider how other people would view the location should you decide to sell it one day. In short, try to be as objective as possible when it comes to location.

2 Good site

Is the property in a good site? Is it next to an MRT station, bus stop, monsoon drain or power cables? Or is it at a T-junction? There is nothing technically wrong with T-junctions, but some people believe it obstructs the flow of good luck in one’s life.

Is the site prone to flash floods and so on? Many people like to live near MRT stations, but some foreigners prefer to avoid the constant noise of the trains. They may prefer quieter areas.

When choosing the site of the property, consider the points that will appeal to your potential buyers in the future.

3 Good layout

Do you like the layout of the apartment or house? Many people prefer their living rooms to feel spacious. Are there many angles and nooks in the house? Some people may consider them bad fengshui.

A more practical consideration is whether the living room and bedrooms are irregularly shaped, with lots of unusable space. A good, clean layout will save you the time, effort and money that you otherwise would have to spend on redesigning around oddly shaped and oddly positioned living areas.

4 Good address

Securing a good address without paying a premium for it is like a windfall. It may not matter much to you now but a good address, such as a nice sounding road name or an auspicious sounding unit number like #08-08, may attract more interest and demand in the property and also a higher price when it is time to sell.

5 Good history

Many potential buyers like to know the background of the property they are buying. Who are the current owners? Why are they selling? Who built the property and how old is it? Is the property owner-occupied or rented out? These things matter in the making of personal and economic decisions.

If the property is for investment, then the purchaser should look into two other areas:

6 Good rental yield

What is the expected rental yield for the property? Is this an acceptable level for you? What is the median rent for properties in that area?

7 Good potential for capital appreciation

What is the median price for property prices in that area? What is the highest and lowest price for properties in that area over the last three, five and 10 years?

The writer is managing director of mortgage consultant Global Creatif Financial. The views expressed are her own.

Lucky numbers

Securing a good address without paying a premium for it is like a windfall…A good address, such as an auspicious unit number, may attract more interest and a higher price when it is time to sell.

Source: Sunday Times, 28 Feb 2010

They came, they saw, they bought.

As of yesterday, more than 300 of about 350 units in The Estuary condominium that were released for sale have been snapped up.

The MCL Land project in Yishun is the first major property launch since measures were announced by the Government last week to curb speculation.

These were: stamp duty to be paid if the buyer sells the property within a year, and lending institutions allowed to lend only up to 80 per cent of the property’s value, not 90 per cent.

Yesterday, more than 80 pairs of shoes were seen outside The Estuary’s showflat when The Sunday Times visited at 1.30pm.

The number increased steadily to more than 100 pairs by 2pm as people came to check out the 99-year leasehold condo.

Most were families with young children or young couples, lured by the condo’s proximity to Lower Seletar Reservoir and attractive prices of about $750 per sq ft.

Inside, all the 15 tables set aside for prospective buyers were filled most of the afternoon.

Sales of the 350 released units began last week. The project has 608 units – comprising one-, two-, three- and four-bedroom types.

‘It’s been encouraging so far despite the measures,’ said an MCL Land staff member, noting that demand was evenly distributed across the various apartment types.

‘At first, there was more interest in the one-bedroom units but when the measures were announced, this died off a little.’

One- and two-bedroom units have usually been popular among speculators at launches over the past year. They make up nearly 40 per cent of units in The Estuary, which is near Khatib MRT station.

Small apartments have been targets for speculators because the lump-sum outlay is relatively more affordable.

The Government’s measures to curb excesses have come at the right time, said Madam Angie Ng who bought a three-bedroom unit at The Estuary for about $930,000 yesterday.

‘I’m relieved actually. We were waiting for this launch and then the measures came. That’ll help curb speculators and prices won’t be jacked up,’ she said.

Madam Ng, 36, who works in the banking industry, is married with two children and lives in a five-room flat in Yishun.

Property agents said The Estuary’s relatively distant location from the city also meant it might not be as attractive for speculators.

The prices were the key lure for the buyers, about 70 per cent of whom live nearby in Woodlands and Marsiling.

‘For upcoming projects in Singapore, the prices are at least $900 psf,’ said ERA agent Shayne Lim, 34, noting that prices have even reached $1,200 psf in Ang Mo Kio.

‘And there hasn’t been a new condo in the Yishun area for over 10 years,’ she said of the good buying response.

People in the real estate sector will also be monitoring sales at another condo – Vision@West Coast – which is set to be launched soon.

Located on West Coast Highway, the 99-year leasehold development has 281 apartments and 14 strata houses. Sizes start at about 800 sq ft for a two-bedroom unit and rise to 5,000 sq ft for the strata houses.

‘Demand should be strong as the location also boasts sea views,’ predicted property agent Jimmy Tan.

The asking price for the project, he added, could be around $1,100 psf.

Source: Sunday Times, 28 Feb 2010

What’s the name of your condo?

If you bought a unit in the 1980s, you probably live in a project with words like ‘palm’, ‘garden’ or ‘park’ in the name.

In more recent times, it became fashionable to incorporate auspicious numbers, like Scotts 28 and 8@Woodleigh.

Now, many developers have plumped for Residences.

Examples include Residences Botanique in Serangoon, Kovan Residences in Upper Serangoon, The Shore Residences in Katong, Vista Residences in Balestier, Holland Residences in the Holland Road area and Tembeling Residence in the East Coast area.

A spokesman for the Street and Building Names Board said that of the 25 to 30 condominium names it approved in 2008 and last year, names with terms like ‘residences’, ’suites’ and ‘@’ were most popular.

New property player Ferrell Asset Management opted for Ferrell Residences for its first condo in Bukit Timah, saying thatthe word ‘residences’ evokes ‘a very personal and intimate feeling towards the development’.

Ho Bee’s general manager of marketing and business development, Mr Chong Hock Chang, shares a similar view. ‘The word conjures a very homely image,’ he said. The firm’s projects include Orange Grove Residences and Dakota Residences.

For developer TG Group, there is a more mundane reason for naming its 102-unit development in the East Coast, St Patrick’s Residences.

It conforms to the residential zoning of the area, and differentiates itself from industrial or commercial zones, said its head of corporate affairs, Mr Lowell Loh.

Frasers Centrepoint Homes, which is launching Residences Botanique this weekend, also drew attention to the word Botanique.

It reflects the wide array of plants and landscaping of the resort-style condo, said a spokesman.

Far East Organization said it tries to express what makes a development unique via the condo’s name.

Its The Shore Residences is so named because its ‘large waterscape with mini beaches and coconut trees’ aims to recapture the old Katong ambience with a long shoreline.

But do names really matter with buyers? Apparently not, it seems. Mrs Debora Neo, 44, who lives in Rivervale Crest condo in Sengkang, said price and location matter more.

Proximity to schools is also crucial, said the mother of two teenage children.

As for the use of ‘residences’, she said it reminded her not of a home or condominium, but of serviced apartments for foreigners here for a short stay.

Source: Sunday Times, 28 Feb 2010

It must be tempting to splash out a bit now that the worst of the recession – and the belt-tightening that it forced on us – is over.

After all, some firms have started restoring pay cuts to employees and year-end bonuses have been paid.

With the mood improving, the urge to snap up that big-ticket item with cash or a loan is getting stronger.

Using cash is one thing, but excessive borrowing can lead to financial trouble.

‘Loans can help us to purchase high-value items or essentials that we do not have the savings or the full amount for at the moment – but it should be something we can afford in the long run,’ said GE Money Singapore’s president and chief executive, Mr Rahul Gupta.

And the same principle should apply, whether for a home loan, a car loan, a home renovation loan, one for education, or even one for a holiday.

‘Consumers need to ensure that loans taken are well within their means,’ said Mr Gupta.

Here are eight things to consider when taking out a loan:

1 A need or a want?

Before taking a loan, ask yourself if the item or service is meant to satisfy a need or a want.

Ms Tan Huey Min, assistant director at Credit Counselling Singapore, suggests that if it is a ‘want’ – not necessary and just for consumption – perhaps it would be better to save for it rather than to pay a ‘premium’ price (that is, the interest cost of borrowing). For instance, don’t borrow to pay for a vacation or a new kitchen appliance.

Take time to consider if there is an alternative to borrowing now or borrow a smaller amount instead. Better still, don’t buy it at all if it is unnecessary.

However, if the purchase is for investment purposes, then perhaps it is okay to get a loan. This could be for renovations that add value to your home, or enhancing your future income earning ability via training and education.

2 Interest cost of borrowing

Consumers should be aware of the type of interest rate that is stated in the loan agreement or marketing material.

And when considering loan options, compare like with like, said Mr Gupta.

Some loans use the annual percentage rate (APR), which reflects the actual interest cost of borrowing, while others refer to the simple interest rate. Shop around for the lowest APR.

The simple interest rate is calculated by applying a flat rate on the original principal amount for the entire loan tenure.

The APR is interest calculated based on the declining principal balance over the tenure of the loan.

As the borrower makes monthly repayments, the principal is reduced every month, so the interest payable on the principal also reduces each month.

Sometimes a loan comes with a zero per cent interest cost if it’s paid via a credit card. Make sure you pay off the debt before the interest starts to build up. If you miss a payment, you may be automatically bumped up to the highest annual interest rate of 24 per cent.

3 Current debt service ratio

Before taking the loan, calculate your debt service ratio. It is the percentage of your monthly income needed to service long-term liabilities.

It provides a useful guide to how much of your take-home pay – that is gross pay less 20 per cent employee CPF contribution and personal income taxes – is used to pay debts.

Debt payments are monthly expenses like mortgage, car loans, personal loans or even credit card debts. A healthy debt servicing ratio – debt divided by income – should be 35 per cent or less.

To put it another way, out of every $1,000 of after-tax and CPF income, you should spend $350 or less on debt repayments.

Ms Tan cautions that if the consumer already has a high amount of outstanding debt to service, it is best to pay down existing debt first before incurring more.

And even if your debt service ratio is less than 35 per cent, it is prudent to consider if you have surplus funds to take on another loan repayment after paying monthly living expenses.

Make sure you know your cash inflow and outflow before taking on another loan.

4 Loan tenure

It is worth considering the optimal loan tenure as it affects monthly repayments and interest paid.

Generally a longer loan tenure means smaller monthly repayments but a shorter loan tenure may lead to lower interest paid, says GE Money.

For example, Mr Mark Tan takes a $10,000 loan for a period of five years at an APR of 18per cent per annum (pa).

His monthly repayment is $254 so the total interest he will pay over the five-year loan tenure is $5,236, over and above the $10,000 loan amount.

If he takes a loan period of three years at an APR of 18 per cent pa, his monthly repayment will be $362 but the total interest paid over three years will be $3,015.

So to minimise the interest payable, a shorter loan tenure may be an option, but the repayments will be higher.

Some financial experts suggest you make the highest repayments you can manage so that you clear the debt in the shortest possible time.

When deciding on a loan tenure, consider your monthly commitments and take the appropriate loan tenure based on your monthly cash flow.

5 Early payment options

Not all loans allow customers to settle early, so read and understand the terms and conditions of the loan before signing up.

An early settlement fee is usually imposed if a loan is paid off early.

For example, if you redeem your GE Money personal loan before the full term expires, an early redemption fee of 3 per cent to 5 per cent of the outstanding amount at the time will apply.

Home loan customers are urged to look beyond interest rates and consider factors such as the lock-in period and penalty fees.

Another potential cost is the loan cancellation fee. An investor who buys a property on speculation and then applies for a loan might be hit with a cancellation fee if the property is sold before the loan is disbursed.

Cancellation fees can range between 0.75per cent and 1.5per cent of the loan amount, and can be quite substantial. For example, if the loan amount is $1million, the cancellation fee works out to $15,000.

6 Late payment fees

Most loans stipulate late payment fees. These are over and above the interest charged for late payment, so go through the terms and conditions of loan agreements thoroughly to ensure you understand them clearly.

Pay special attention to fees incurred for late payment.

For instance, credit cards typically charge a one-time administrative fee of $50 to $80 for late payment. This is besides the 24per cent interest charged on the sum that is rolled over.

So keep track of the payment dates and remember to pay before the due date. Try to have fewer loans or credit facilities and avoid having multiple sources of credit. In order not to incur interest and penalty fees, pay your outstanding credit in full.

7 Payment flexibility

Avoid defaulting on loan repayments as it will hurt your credit history. However, a typical loan tenure is for at least a year, and sometimes it is hard to predict what will happen so far into the future.

You might hit cash flow difficulties at some point, so it is worth looking for loans that offer some payment flexibility and provide rewards for prompt payment.

For example, Mr Gupta says that GE Money’s James personal loan, which caters to people earning $30,000 and above, offers several flexible payment options. They include allowing customers to defer two payments a year, paying only the interest component or paying higher or lower instalments at the start, or end of their loans.

Such features offer flexibility in managing your cash flow, particularly during unforeseen circumstances. GE Money customers are also rewarded for prompt payment by having part of their interest component, or their last instalment amount of the loan, waived.

For those who can’t meet their monthly payments, experts suggest that they approach their lender first for assistance to restructure a loan. Financial institutions will usually review such requests on a case by case basis. A responsible lender will work with its customers to provide a solution.

8 Other loan terms and conditions

Make sure you understand the key fees and charges stipulated by a loan agreement. This makes you aware of what to expect when a loan is taken and reduces any surprises after it has commenced.

If you are acting as a guarantor for a loan, be clear about the terms and conditions of the agreement, especially those related to your obligations as a guarantor.

Ms Tan says: ‘In the eyes of the creditor, the guarantor is the ’same’ as the borrower, meaning, both the borrower and the guarantor are jointly and severely liable for the loan.’

This means that even if you are willing to act as a guarantor, you should also consider your own ability to make repayments in case the principal borrower fails to repay.

She recalled a case in which a person (let’s call him John) became a guarantor for a stranger (Jim), who wanted to buy a car, in return for a fee.

When Jim defaulted on his car loan, the car financier pursued legal action against both people.

Jim could not repay and became a bankrupt. In the end, John assumed the balance of the loan, which was $30,000, after the car was sold and makes regular payment to avoid being made a bankrupt by the car financier.

Source: Sunday Times, 28 Feb 2010

Tenants had heard it before: The Copthorne Orchid Hotel would be torn down for a condominium.

So there was a sense of deja vu when they learnt from reading The Straits Times last Monday that the 440-room hotel in Dunearn Road would go.

In 2005, City Developments Ltd (CDL) had said it planned to turn the hotel’s site into a condominium. But that did not happen.

CDL owns hotelier Millennium & Copthorne (M&C), which operates the Copthorne Orchid Hotel.

But its latest announcement seems to be for real. A CDL spokesman told The Sunday Times it wants to launch the condominium project as early as this July.

The property developer has not decided on a firm date to put the 150 units of the project on sale as it ‘had just obtained provisional permission to redevelop’.

Depending on how well the condominium sells and existing tenancy obligations, the building may be torn down only next year or later.

M&C held back its plans in 2005 ‘as there was a projected shortage of hotel rooms’, its spokesman said.

But its recent announcement was not good news to its tenants – one of which has been leasing space in the hotel for 35 years.

Madam Anne Lee, 52, owner of Anne Salon, was upset that the hotel withheld such important information as she renewed her lease just three months ago.

‘They must tell us so we can start looking for another landlord,’ said Madam Lee, who has been running her salon there since 1975.

Nice Express, which operates its Singapore-Kuala Lumpur express bus service from the hotel, was also not informed about the plans.

Mr Charles Lawrence, 56, operations and sales supervisor at Nice’s Singapore office, said: ‘I do not know whether to move or stay.’

This comes at a bad time for Nice as it spent $100,000 last year to renovate its office at the hotel.

When asked why tenants were not informed, an M&C spokesman said: ‘We have not sent out any notices as there is no firm date yet.

‘The terms of the tenancy agreement contain a three-month notice clause. We have sufficient time on hand to serve proper and timely notice to all our tenants.’

Source: Sunday Times, 28 Feb 2010

RUNAWAY lawyer Zulkifli Mohd Amin had moved more than $10 million out of his firm’s client’s account over a 10-month period in 2007, a sum larger than the $6 million previously thought.

These details emerged in a 56-page report by a disciplinary tribunal comprising retired Judge of Appeal L.P. Thean and lawyer Tan Chuan Thye.

The tribunal, appointed in August last year by the Chief Justice to formally investigate the case, found Zulkifli guilty of a total of 211 charges of misconduct.

Zulkifli was one of three partners of the now-defunct firm of Sadique Marican and ZM Amin.

He is not around to face the music, but his partners, Mr Mohd Sadique

Ibrahim Marican and Mr Anand Kumar Toofani Beldar, will have to face a Court of Three Judges for breaching accounting rules and failing to safeguard clients’ money.

Out of the 211 charges against Zulkifli, 208 are related to unauthorised withdrawals of funds from the account used to hold clients’ money.

The remaining charges were for failing to ensure that the client’s account was not overdrawn and failing to keep the books in order.

The accounts of the firm were managed by Zulkifli.

The other partners have each been found guilty of three charges of failing to keep the books in order and failing to supervise transactions involving clients’ money.

In November 2007, Mr Sadique and Mr Anand told the Law Society that Zulkifli was missing and they suspected him of misappropriating money from the firm.

The firm’s accounts were inspected.

Among other things, it was found that the firm had been issuing cash cheques after May 15, 2007 even though it was no longer allowed to do so under the rules.

Fund transfers were made and cash cheques were issued without supporting documents.

Although Mr Sadique’s signature appears on some forms and cheques, a handwriting expert has concluded that they were forged.

The 211 charges form the most serious of three separate disciplinary proceedings against Zulkifli. The tribunal has found that the case is serious enough to be referred to the Court of Three Judges, which has the power to suspend or strike lawyers off the rolls.

On Tuesday, another of the three cases, involving Zulkifli’s inaction in a conveyancing transaction that caused his clients to lose out on a property deal, was brought before the Court of Three Judges by the Law Society seeking to disbar Zulkifli.

This drew criticism from the judges, who questioned why the society brought up less serious charges when it was well-known that Zulkifli had done worse. The court asked for more details about his other disciplinary proceedings.

Yesterday, it emerged that Zulkifli was found guilty earlier this month of the 211 charges. Both cases will be dealt with together by the court.

The third case is pending.

According to sources, the less serious complaint was made in November 2007 and the disciplinary tribunal, in its report in October last year, said the matter should be brought to the Court of Three Judges.

By law, the society had a one-month deadline to make the application.

It is understood that the society had considered deferring the less serious case, but as it was unsure how long it would take to investigate the 211 charges, it decided to go ahead with the less serious case.

Source: Straits Times, 27 Feb 2010

TAIWAN’S government has sold land in downtown Taipei at record prices, indicating demand for premium housing units amid improving ties with China, the island’s biggest property broker said.

A 401 square metre site fetched NT$731 million (S$32 million) at an auction yesterday, after NT$789 million for 384 sq m sold on Jan 28, data from the National Property Administration website showed. These were the highest prices for residential land in Taipei, said Stanley Su, a senior researcher at Sinyi Realty Co.

‘These prices indicate optimism for the high-end market,’ Mr Su said. ‘There’s demand, as China-based businessmen and overseas Chinese may be coming back amid strengthening cross-strait relations.’

China and Taiwan plan a trade agreement to reduce import tariffs. The government of President Ma Ying-jeou, who was elected in March 2008 on a platform of improving relations with the island’s biggest trading partner, has eased restrictions on investments between banks, brokerages and insurers on the two sides, as well as transportation links.

Revenue from government land auctions last year totalled NT$10.8 billion, according to the Ministry of Finance.

Prices of residential property in the Taipei metropolitan area rose 20 per cent last year after banks cut mortgage rates to the lowest since records began, according to Sinyi Realty.

The central bank has held its key interest rate at a record low of 1.25 per cent in the past 12 months to help boost the economy. Gross domestic product in Taiwan expanded at the fastest pace in five years in the fourth quarter.

Taiwan and China have been ruled separately since Chiang Kai-shek’s Kuomintang, or Nationalists, fled to the island after being defeated by Mao Zedong’s Communists in 1949. China regards Taiwan as part of its territory.

Source: Business Times, 27 Feb 2010

RWS effect reflected in higher land values on island while interesting trend emerges in CBD

SENTOSA has seen a big jump in development charge (DC) rates, reflecting higher land values on the island following this month’s opening of Resorts World Sentosa (RWS).

On average, the government is raising DC rates (payable for intensifying or enhancing the use of some sites) about 12 per cent for landed residential use from March 1; but in Sentosa, they will climb 17.3 per cent. For non-landed residential use, Sentosa saw a 10 per cent hike in DC rates compared to the average rise of about 8 per cent. And while DC rates for commercial use will be cut roughly 2 per cent on average against the backdrop of weak office rentals, Sentosa is the only location where they will be raised – to the tune of 12.5 per cent.

It is also the only location where the government increased the hotel-use DC rate; the hike was 12.2 per cent. In all other locations, the DC rate for hotel use (which also covers hospitals) was left untouched.

DC rates – which are revised on March 1 and Sept 1 each year – are specified by use groups across 118 geographical sectors throughout Singapore. The review is conducted by the Ministry of National Development in consultation with the Chief Valuer, who takes into account current market values.

Some analysts pointed to an interesting trend emerging in the Central Business District. DC rates for commercial use in the CBD fell further while non-landed residential rates rose and actually surpassed the commercial rates. This could mean paying a higher DC for those who redevelop old CBD office blocks into apartments and could impact such conversions, especially in the case of 99- year leasehold sites as their owners would also want a lease top- up, says DTZ’s South- east Asia research head Chua Chor Hoon.

Jones Lang LaSalle’s SE Asia research head Chua Yang Liang goes a step further, predicting that the new trend could have an ‘unexpected effect of encouraging the redevelopment of existing older office stock into the same office use and discouraging conversions to residential’. Jones Lang LaSalle’s (JLL) analysis showed that DC rates for non-landed residential use were raised for 116 geographical sectors and left unchanged for the remaining two areas.

The biggest hike of 15.4 per cent was seen in three sectors: 91 (which covers the Mountbatten, Meyer and Broadrick areas); 98 (Tampines, Bedok Reservoir, Bedok North, Kembangan); and 101 (Paya Lebar Way/Eunos/Sims Avenue).

This was followed by Sector 76 (Everton/Spottiswoode Park) with a 14.5 per cent increase. Market watchers attribute this to last October’s en bloc sale of Dragon Mansion at a land price about 68 per cent above the land value implied by the prevailing Sept 1, 2009 DC rate for the location.

Also, the geographical sectors covering Serangoon Ave 3, Upper Thomson Rd and Sengkang West Avenue – where residential sites have been sold at bullish prices at state tenders in the past six months – were raised 12.5 per cent, 10.5 per cent and 9.1 per cent respectively.

Colliers International executive director (investment sales) Ho Eng Joo said that overall, the growth in non-landed residential DC rates may hamper developers’ landbanking plans, especially for collective sales sites that require DC payment.

Credo Real Estate managing director Karamjit Singh, however, said yesterday: ‘Three quarters of the en bloc projects our company is working on don’t involve any DC payment. As for the rest, DC as a component of the entire land cost is not very high and hence the increase in DC rates will have minimal impact on the en bloc sale exercise.’

For landed residential use too, charges were raised in 116 sectors and left unchanged in the other two.

Besides Sentosa, other areas with the biggest hikes include Holland/Dunearn Rd/Sixth Avenue (up 17.1 per cent) as well as the Good Class Bungalow areas of Botanic Gardens/Gallop Rd/Tyersall and Ridout/Peirce Hill/Swettenham Road (each up 16.9 per cent), JLL’s analysis shows.

Commercial DC rates were trimmed between 3.2 and 13.3 per cent in 23 sectors. The biggest chop was in the Cecil St/Robinson Road area. There were also cuts in other parts of the financial district, such as Marina Bay, Raffles Place and Fullerton Road, as well as in the Thomson/Moulmein, Newton Circus, Bugis and Tanglin/Cuscaden areas.

Source: Business Times, 27 Feb 2010

IF MONDAY’S advice to treasure our homes and not use them to make a quick buck is to be heeded (‘Homes are for keeps, not speculation: PM’), the Government should review the law permitting collective property sales.

Such sales exercises invite speculation in the private property market at the expense of a home owner’s security.

I have not lived in peace for the past three years because my neighbours voted to go en bloc. The main argument of the pro-collective sale lobby had nothing to do with urban renewal. It was about reaping a windfall.

The bid at my condominium, Green Lodge in Toh Tuck Road, fell through last month, but there is nothing to stop my neighbours from trying again.

I dissented because I treasure my home for the reasons implied in Monday’s report: It gives me peace, familiarity and stability in the twilight of my life; and it is my nest egg which I do not wish taken away from me by others’ temptation to make a fast buck.

But how can I take good care of my treasured asset if I have no control over it?

The power to sell my home lies not in me but in 80 per cent of my neighbours. And that is why the law must be changed.

Tan Keng Ann

Source: Straits Times, 27 Feb 2010