The Housing and Development Board (HDB) is looking into supply and demand management measures to ease the shortage of parking lots in some estates.

About 10 per cent of HDB carparks are currently unable to meet local parking demand, due to changes in the demographic profiles and car ownership patterns.

Parliamentary Secretary for National Development Dr Maliki Osman said this in Parliament, in response to questions from MP for Aljunied GRC Cynthia Phua on the ratio of carpark lots to the number of residential units in new HDB estates.

Ms Phua also asked if there are plans to increase the carpark lots in mature estates to reflect changes in the population demographics, as more HDB units now have more than one car.

Dr Maliki said in general, HDB’s 1,800 carparks are sufficient to cater to both the season parking and short-term parking needs.

The average season parking take-up rate in HDB carparks is about 73 per cent.

Dr Maliki said that depending on the availability of space as well as cost considerations, HDB may add parking lots. It can extend the existing surface carparks to adjacent vacant land, add parking decks to existing multi-storey carparks (MSCPs), or build new MSCPs to replace existing surface carparks.

“There are limits to increasing carparks in land scarce Singapore. Therefore, demand management measures are also essential,” Dr Maliki said.

He added: “Where there are only limited parking lots for season parking ticket holders, HDB accords priority to the first car in each household. HDB also groups its carparks for season parking such that car owners living in several nearby blocks share their carpark lots.

“HDB will continue to monitor and manage the supply and demand for HDB carparks to address residents’ changing parking needs.”

Source: Channel News Asia, 4 Mar 2010

DEVELOPERS are gearing up to launch more projects – especially prime ones – into a thriving property market driven by confident buyers keen to splash out on the back of the improving economy and a low interest rate environment.

The Government’s anti-speculation moves last month are having little effect on genuine home hunters, who have ever wider real estate options.

Potential buyers will certainly have no lack of choices when it comes to new launches this month with ‘easily half a dozen launches’ coming up, said CB Richard Ellis (CBRE) executive director of residential services Joseph Tan.

Mass-market projects have been setting the pace for months but prime developments, which began inching back into the market late last year, are becoming more prevalent.
A CBRE Research report yesterday said that Singapore’s luxury residential market is expected to make a strong rebound.

It noted that new luxury projects recorded launch prices of between $2,500 and $3,400 per sq ft (psf) in the fourth quarter of last year.

This beats the $2,100 psf to $2,700 psf range achieved at the end of 2008, demonstrating a strong turnaround, it said.

In January and February, 88 units of CapitaLand’s prime Urban Suites were sold at $2,500 psf on average while about 35 units of The Laurels in Cairnhill Road went at $2,500 psf to $2,900 psf, it said.
The launches coming up on the weekend include the Hiap Hoe Group prime estate Waterscape At Cavenagh, and Hong Leong Holdings’ Aalto.

The Waterscape At Cavenagh will house 200 one- to four-bedroom units and penthouses ranging from 581 sq ft to 2,992 sq ft. Prices at this weekend’s launch will be about $1,880 per sq ft.

Hiap Hoe gave a preview of the project in late November and sold just three units at a median price of $1,909 psf. Another five units were sold in December. But this year it has sold 88 units, with the bulk transacted over the weekend after Chinese New Year, from $1,715 psf to $2,020 psf or $1.03 million to $3.15 million.

This weekend will also see Hong Leong Holdings release 60 high-floor units at the freehold 196-unit Aalto in Meyer Road. Prices will start from $2,000 psf.

A handful of lower-floor units are also available, from $1,500 psf. Absolute pricing ranges from $3.1 million for a 1,442 sq ft three-bedder to $5.3 million for a 1,959 sq ft four-bedroom unit.
The Aalto was first released in 2007 with units selling for around $1,950 psf. It was then launched in January 2008.

One unit was sold in January this year at $2,011 psf, leaving 78 unsold units in the condo, which will receive its temporary occupation permit in September.
A Hong Leong Holdings spokesman said: ‘We have maintained the original selling price of the Aalto in light of premium value and location.’

Next weekend, buyers can look forward to Cheung Kong Holdings’ The Vision in West Coast Crescent, The Laurels and Tiong Aik’s Coralis in Joo Chiat Road. The Vision, a 99-year leasehold condo, is said to be priced about $1,100 psf.

Coralis is a freehold condo featuring one-bedders as small as 495 sq ft and penthouses of up to 3,089 sq ft. Indicative pricing is from $1,350 to $1,550 psf.

The pace will quicken over the next two to three months with possible launches including 76 Shenton Way, Seascape and Residences at W in Sentosa Cove, The Waterline on the former Toho Gardens site in Yio Chu Kang, UOL Group’s Dakota Crescent project, and Starlight Suites in River Valley Close.

CBRE Research said the luxury projects Ardmore 3 and those on the sites of the old Grangeford, Hillcourt and Parisian estates are likely to be marketed in the first half of the year. Prices and rents of luxury properties are expected to rise by 10 per cent to 15 per cent and 5 per cent to 10 per cent respectively this year.

Overall, prices will continue to rise but at a much less frenetic pace, said Mr Tan. ‘If you look at the recent land tenders, there’s a certain replacement cost that developers need to look at. Some developers may want to put a forward price on their projects now as they don’t want to run out of their landbank too quickly.’

Source, Straits Times 4th March 2010

Residential prices could plateau in H22010 but major correction unlikely

RENOWNED short-seller Jim Chanos sees a property bubble on the verge of bursting in China. But other well-known investors disagree – and on their side of the fence is CB Richard Ellis president and CEO for Asia Chris Brooke.

Residential prices in China could plateau in the second half of this year but a major correction is unlikely, he said in an interview with BT.

He also believes that large parts of the Singapore and Hong Kong property markets are not in risky territory.

For China, 2010 could be ‘a year of consolidation and stabilisation and getting back to a more sustainable market’, he said. ‘Residential prices could probably increase a little bit in the first half and stabilise in the second half.’

Price growth in China has slowed in the past few months, Mr Brooke said. There is a seasonal effect – buying tends to ebb during the festive period.

Government measures to cool the property market have had an impact, he said. For instance, the China Banking Regulatory Commission told banks last month to raise downpayments and interest rates for third mortgages.

Such initiatives have dampened sentiment. ‘Buyers take a step back and say ‘maybe I’ll wait and see what happens before I make that decision’,’ Mr Brooke said.

The government could implement more measures to calm the market, he said. ‘Policy risk is always there in China. The government has probably more involvement in the market there than anywhere else.

‘But because the real estate sector as a whole is an important part of broader economic growth, I think the government will look to strike a delicate balance.’

Naysayers are worried not just about fervour in China’s residential sector but a potential supply glut in its commercial sector. Reports of buildings left vacant while massive new ones take shape have fuelled more talk of a bubble.

But Mr Brooke is sanguine. It may take several years for supply to be absorbed, but there will be demand from multinational corporations and domestic companies, he said.

For instance, there has been strong demand recently for offices in Beijing, where rent for Grade A space may have bottomed.

As for Hong Kong and Singapore, he sees limited speculation but little policy risk. Recent anti-speculative measures introduced in both markets have signalled that the authorities are keeping a close eye, he said.

In Hong Kong, home prices shot up in the luxury segment but rose at a more measured pace in the mass to mid-market. As such, prices have more room to grow this year in the mid-market than in the luxury segment, Mr Brooke reckons.

Source: Business Times, 4 Mar 2010

Consolidation is the way to go given tighter credit markets, falling property prices, says one seller

Japan’s real estate investment trusts will accelerate takeovers in the US$32 billion industry as banks pressure them to consolidate amid a tighter credit market and falling property prices, said Curtis Freeze, who agreed to sell his Reit to a unit of Oaktree Capital Management LLC.

The number of Japanese Reits may fall by half to about 20 in the next year as the funds seek merger partners to counter falling demand and tighter loan terms, Mr Freeze, chairman of Honolulu-based Prospect Asset Management Inc, said.

Japan’s 37-member TSE Reit Index has lost 58 per cent from its peak in May 2007 as the global credit crisis made it harder for them to refinance loans and acquire capital to purchase properties. Mr Freeze, faced with refinancing problems, last week agreed to sell Prospect Reit Investment Corp to Japan Rental Housing Investment Inc, controlled by Oaktree Capital, marking the fifth Reit takeover in Japan since September.

‘Japanese Reit merger and acquisitions are just getting started,’ Mr Freeze said in an interview in Tokyo yesterday. ‘There is a clear divide between the winners and losers, and by agreeing to merge, Prospect went from the losing camp into the winning camp.’

Property acquisitions by Japan’s 41 publicly traded real estate investment trusts before some trusts merged, surged to 66.4 billion yen (S$1.04 billion) in the three months ended December, from 3.6 billion yen in the previous quarter, according to Urban Research Institute Corp. The pick-up came after the government started a fund to support Reits, which derive most of their profit from rental income and pay out the majority of it as dividends.

Prospect Reit rose 2.6 per cent to close at 87,400 yen on the Tokyo Stock Exchange, compared with a 0.5 per cent gain for the broader TSE Reit Index. Japan Rental Housing rose 1.2 per cent to 128,000 yen.

Japan opened the Reit market in September 2001, with its first two Reits – Nippon Building Fund Inc and Japan Real Estate Investment Corp – playing catch-up in developing the securities pioneered by the US in the 1960s.

The benchmark TSE Reit Index had a record market value of about 6.79 trillion yen in May 2007, compared with about 2.84 trillion yen today. The decline came as the collapse of Lehman Brothers Holdings Inc in September tightened credit conditions.

Japanese bank lending dropped 1.7 per cent in January from a year earlier, the largest decline since September 2005, the Bank of Japan said last month. The drop, amid a five-year low in demand for loans, compares with a 1.2 per cent contraction in December.

Shareholders will receive 0.75 of a share in Japan Rental Housing for each Prospect share they own, the two companies said on Feb 26. Japan Rental Housing will be the surviving entity. The takeover, which is expected to be completed in July, will create a trust with assets of about 184 billion yen.

The takeover of Prospect follows four other combinations of Japanese Reits. Advance Resident Investment Corp merged with Nippon Residential Investment Corp on March 1, and Japan Retail Investment Corp and Lasalle Japan Reit Inc combined on the same day.

Out of the five mergers, only two funds have announced plans to raise capital as part of the deal, according to data compiled by IB Research and Consulting Inc. Japan Rental Housing said that it would issue five billion yen worth of shares through private placement, while Daiwa Housing Industry Co bought six billion yen in new shares in failed New City Resident Investment Corp after it merged with Daiwa’s Reit.

‘There will be more J-Reit mergers on the back of declining credit worthiness and difficulty in refinancing,’ said Mikio Namiki, an analyst at Mizuho Securities Co. ‘The key to success would be finding a financially sound partner rather than how big the funds would become, so that they can improve their creditworthiness.’

Rating and Investment Information, a Japanese rating company, in a note dated March 1 said that the fund-raising environment for Prospect is not ‘favourable’ even after the merger plan announcement. Mr Freeze said that refinancing of his bonds worth 24.8 billion yen due in March should not be a problem.

‘Every merger in Japan has to win banks’ support and Reits are no exception. We agreed to merge because the credit quality is much better for Japan Rental. There is no problem with our refinancing due in March.’

Mr Freeze said that by exiting the day-to-day management of his own Reit, he plans to help Oaktree find trusts to buy, declining to identify any targets. He began buying Tokyo properties in 2002, when Japan was emerging from its third recession in a decade, and invests in 14 Japanese Reits, according to Bloomberg data.

Source: Business Times, 4 Mar 2010

Access to financing, income growth, foreign demand will up housing sales

The outlook for the Malaysian property market is promising, with sales volume expected to increase by 5 to 10 per cent this year, according to RAM Holdings Bhd.

In stating this, its chief economist Yeah Kim Leng said that the improving economic outlook and friendly lending policy will help to increase the confidence level of consumers and boost the property market.

‘Affordable housing and domestic-led growth strategy implies supportive policies will continue, though Bank Negara Malaysia remains wary of asset bubbles,’ Dr Yeah said at a talk organised by the International Real Estate Federation (FIABCI) here yesterday.

He added that the favourable demographics, stricter-but-still easy access to home financing, rural- urban migration, foreign demand and income growth are all expected to improve housing sales.

Dr Yeah said that expectation that the central bank will start ‘normalisation’ of its monetary measures beginning this month will not dampen home purchases, especially when economic growth strengthened further.

RAM expects an increase of 0.75 to 1.00 percentage point in the overnight policy rate by year-end.

Loan growth is projected to expand between 8 and 10 per cent this year with non-performing loans likely to hover around 2-3 per cent.

Loans growth remained positive at 6.5 per cent last year during the first 11 months of 2009 despite the economic recession as loans to the broad property sector outpaced overall loan growth.

Dr Yeah said that consumer credit will continue to remain the core focus of banks’ lending, but competition from non-financial institutions is likely to intensify.

Property loans accounted for 36.2 per cent of total banking system loans.

‘The banks still view residential property lending as relatively safe, accounting for 26-27 per cent of their loans portfolios,’ he said, adding that credit conditions are not expected to tighten as demand is not overly excessive and an output gap remains for the rest of the year.

On the Malaysian economy, Dr Yeah said that the country is expected to resume modest growth this year with an upside bias should public sector reform and transformation policies and strategies strengthen further consumer and investor confidence, thus triggering a surge in domestic and foreign direct investment.

‘After a massive running down of inventories last year, re-stocking will contribute to higher production this year but ‘autonomous’ or ’self- sustaining’ growth has to come from private consumption and investment,’ he said.

RAM projects the country’s economy to grow by 4.9 per cent in 2010 and 5.4 per cent in 2011, supported by domestic-driven private sector spending and government spending.

Dr Yeah said that Malaysia could reduce its budget deficit to below 3.0 per cent of the gross domestic product (GDP) from 2013 onwards, compared with the forecast of 5.6 per cent this year.

According to him, there is a chance for the deficit to be reduced from next year if economic growth can improve further.

‘With the goods and services tax (GST) introduction next year, the country can raise more revenue and will be able to cut back on spending,’ he said.

Currently, taxes and royalties from oil and gas account for 40 per cent of the government revenue while its debt level makes up 40 per cent of the GDP.

Source: Business Times, 4 Mar 2010

IN A move that is expected to boost business for Singapore’s meetings, incentives, conventions and exhibitions (MICE) scene, Suntec Singapore and Resorts World Sentosa (RWS) are joining hands in a partnership to cross sell each other.

Under the agreement, event planners can organise exhibitions and meetings at Suntec – which is located within the Central Business District – but hold social events at RWS, which features entertainment options such as the casino, a 1,600-seat theatre as well as other attractions.

‘This proposition will entice, as well as, provide today’s business travellers innovative options while they are in Singapore, thereby strengthening and solidifying Singapore’s dominance in the MICE industry worldwide,’ said Ong Wee Min, Suntec’s director of sales and client services.

The partnership could also help address one major concern raised by industry players – that MICE venues here could all end up scrambling over the same piece of pie, since both integrated resorts collectively add some 180,000 square metres of space with their MICE facilities.

Already, organisers of trade shows such as Sea Asia and Gaming Asia have opted to move their next shows to the upcoming Marina Bay Sands, as opposed to holding them at the same venues used previously.

RWS has already lined up more than 50 events from now through 2011, which includes World Urban Transit Congress.

Source: Business Times, 4 Mar 2010

MR DENIS Distant said that the benefits of the new progressive property tax may not last long if IRAS starts revaluing the Annual Value (AV) of properties (BT, Feb 26, ‘Property tax boon may be short-lived’).

Property tax is a tax levied on the ownership of property, based on the AV of the property. AV reflects the prevailing market rentals of properties. The tax payable will thus increase with an increase in market rentals and vice versa.

IRAS will only adjust the AVs of properties if the market rental data support such revisions. Currently, owner-occupied residential properties are taxed at a flat 4 per cent.

With the progressive property tax schedule, properties with an AV of less than $77,000 will pay less property tax compared to the current flat 4 per cent rate.

This is because the first $6,000 of AV is exempt from property tax. Even with future increases in AV, most owner-occupied properties will still pay lower tax under the new regime so long as their AV does not exceed $77,000. (As a reference, all HDB flats have AVs of not more than $11,000 currently.)

Only about 3 per cent of private owner-occupied residences now have AVs in excess of $77,000. Even then, our property tax rates will remain lower than in most international cities, even for the high-end properties.

Deanna Choo
Director (corporate communications)
IRAS

Source: Business Times, 4 Mar 2010

ORCHARD Road newcomer 313@somerset has received a higher than expected nine million visitors since it opened three months ago, the mall’s owner, Lend Lease Group, said yesterday.

‘When we first did the research three years ago, we were expecting something like 60,000-70,000 (visitors) a day. But now, the average is about 100,000 a day,’ said Ooi Eng Peng, executive officer for retail and investment management in Asia for Australia-based Lend Lease.

The 301,000 square foot mall is fully leased at ‘market rents’. Lend Lease won the retail site above Somerset MRT station in a government tender in 2006 with its top bid of $617.2 million. The mall had its official opening yesterday and now Lend Lease is on the lookout for more sites.

‘We are very committed to Singapore and we hope we can get more land to build retail malls here,’ said Mr Ooi. ‘But the market landscape is quite competitive, everybody is trying (to get more land).’

Lend Lease, in particular, hopes to grow its presence in the suburban retail space, said Mr Ooi: ‘If you look at our model around the world, we are very much focused on suburban malls.’

In Singapore, Lend Lease also has Parkway Parade Shopping Mall in its retail portfolio. But the company is not placing all its bets on the retail scene here – it also has plans to grow into other regional markets.

‘For the next three years . . . we are very focused on three countries – China, Malaysia and Singapore,’ said Mr Ooi. ‘Singapore retail is very competitive because retail malls here are very tightly held. And China is a very big market for us. We are not rushing there but with our skills in retail, hopefully we can get some advantage in China.’

Lend Lease hopes to have a retail presence in China by the end of this year. And in Malaysia, Lend Lease has teamed up with property group SP Setia to build a RM750 million (S$311 million) retail mall in Setia City, in the Setia Alam township in Shah Alam.

Source: Business Times, 4 Mar 2010

THE tenants at Orchard Central mall, which is barely a year old, say they are struggling to keep their businesses afloat.

The corridors outside the shops are quiet, and walk-in customers are a rare breed – a stark contrast to the buzz at 313@Somerset and Ion Orchard, two malls which also opened last year.

At least one shop at Orchard Central, Fox Salon, has already closed, and tenants say about 70 of them have gone to landlord Far East Organization (FEO) to plead for rental rebates.

Other shops in Orchard Central seem headed the same way as Fox Salon, but some tenants are holding on, for fear of incurring the penalty for breaking their leases.

A beauty parlour owner, who gave her name as Ms Ng, said: ‘We really want to leave this place. How are we to survive here for three more years?’

Each day she stays, she loses about $500, she said.

Her fourth-floor neighbour, Optical 88, is seeing an average of just four customers a day, fewer than at its other outlets in the heartlands.

Only a few shops seem to be keeping their heads above water. One is hair salon La Coco, which markets itself to Korean expatriates. It said it gets about 40 customers a day.

A spokesman for the salon said its Korean stylists keep the regulars returning, but if it had to rely on walk-ins, it too would go under.

Many other tenants declined to comment, saying their landlord had warned them against talking to reporters. This was denied by FEO, which said it was ‘reviewing the performance of the outlets on a month-to-month basis’ and ‘granting rental assistance when appropriate’.

The mall, together with 313@Somerset and Ion Orchard, opened to great fanfare last year, hoping to benefit from a shopping frenzy as the economy emerged from a slump. It pulled in a million shoppers last December.

That was its peak number, said FEO, but it was also the traditional Christmas shopping period. In addition, FEO had pumped $5 million into advertising and promotions to get it off to a good start.

Orchard Central welcomed its first shoppers last May, departing from standard mall conventions in two ways: One was that it was a ‘vertical mall’, with 11 storeys of shops above ground. The other was its absence of anchor tenants.

Mall watchers say these factors may be why it is doing badly. Mr Colin Tan, director of property consultancy Chesterton International, said a mall needs a crowd puller like a cinema or a big department store. He also said that Orchard Central’s labyrinthian layout does it no favours.

Auditor Teng Oon Tang, 24, who said she is unlikely to go back, said: ‘Whenever I go there, I get lost or end up in a dead end. The only good thing it has are the comfortable sofas.’

Mr Ooi Eng Peng, chief executive of Lend Lease, which designed the neighbouring 313@Somerset, said his mall was built for easy navigation and to show off the shops. ‘We’re really happy with the mall. It has caught on as Singaporeans’ favourite.’

Business is booming there, and at Ion Orchard. Nine million shoppers have visited 313@Somerset in three months, and Ion Orchard has been packing in 4.5 million visitors a month.

A check with their tenants confirmed this.

Marche at 313@Somerset says it serves more than 1,500 diners a day. Very Wooonderland, a clothing store in Ion Orchard, averages 100 customers daily and makes about $30,000 a month.

Source: Straits Times, 4 Mar 2010

Upmarket residential property rentals could climb 5-10% this year: CBRE

LAUNCH prices of new luxury residential projects in Singapore rose about 20-25 per cent last year and could appreciate a further 10-15 per cent this year, says CB Richard Ellis.

Rentals of completed luxury homes, which slid 10.5 per cent in 2009, could increase 5-10 per cent this year, according to the property consulting group.

Already, in the first two months of this year, prices have been climbing steadily, CBRE said, citing sales of 88 units at Urban Suites at $2,500 psf on average and about 35 units at The Laurels at $2,500-2,900 psf, although the latter features smaller units. Both projects are in the Cairnhill area.

Other luxury projects that will be marketed in the first half of 2010 include Ardmore 3, Nassim 8 and those on the sites of Grangeford and Parisian, CBRE said.

The Singapore residential property launch meanwhile continues to teem with activity in various market segments.

At Meyer Road, Hong Leong Holdings is releasing this week close to 60 upper-floor units at Aalto, a 27-storey freehold condo with a total of 196 units. Prices will start from $2,000 psf.

‘Absolute pricing ranges from $3.1 million for a 1,442 sq ft three-bedder on the 18th floor to $5.3 million for a 24th level four-bedroom apartment of 1,959 sq ft,’ the company said in a statement yesterday. A handful of lower-floor units are also available, from $1,500 psf.

The project was first launched in early 2008 and as at end-January this year, 118 units had been sold. Aalto comprises three and four bedroom apartments and penthouses. It is expected to receive Temporary Occupation Permit in September this year.

Hiap Hoe is also doing an official launch of its 200-unit Waterscape At Cavenagh this week. So far, it has sold 96 units. The average selling price is about $1,880 psf. The seven-storey freehold condo comprises one-to-four-bedroom apartments, and penthouses.

Later this month, Hong Leong Group could release a 202-unit project on the former Ong Building site at 76 Shenton Way. TID Pte Ltd – a joint venture between Hong Leong and Mitsui Fudosan – is also expected to preview in a few weeks Nathan Suites, a 24-storey project at Nathan Road, opposite the Malaysian High Commission. The project’s 65 units comprise two, three and four-bedroom apartments as well as penthouses.

CBRE, in its release on the luxury residential market, said that recent sales activities point to the start of a revival in this market segment. ‘It is likely that this interest in luxury homes is sustainable given the low interest rates and improving economic environment,’ the firm’s executive director, Li Hiaw Ho, said.

However, he predicts that ‘we are unlikely to see runaway prices the way we did in 2007 as homebuyers will be less impulsive and more discerning following the latest government measures’ to cool the market.

Back then, average launch prices of new luxe projects jumped from $1,800-2,600 psf in 2006 to $2,000-4,000 psf in 2007.

Overseas buyers returned at upmarket property launches in Singapore in Q4, as seen at Marina Bay Suites, Urban Suites, and Kasara the Lake, a plush villa development at Sentosa Cove. This bodes well for the market segment.

Elsewhere in Asia, prices of luxury homes in the secondary market edged up in Beijing, Shanghai, Guangzhou and Hong Kong by 6-10 per cent in Q4 2009 over the preceding quarter while remaining largely stable in other markets.

Singapore saw a 2.7 per cent quarter-on-quarter gain in average prime residential price in the secondary market to $2,260 psf in the fourth quarter. Despite strong sales, leasing demand for luxury homes remained rather fragile in some cities, with Beijing, Guangzhou, KL and Ho Chi Minh City posting a modest rental drop in Q4.

Leasing markets in Hong Kong, Shanghai and Bangkok began to gradually recover, with rents for luxury homes rising by increments ranging from one per cent in Bangkok to 6 per cent in Hong Kong.

Looking ahead, CBRE forecasts that end-users and investors may adopt a more cautious approach in the next couple of months following the introduction of measures that tighten lending for property in certain markets.

Source: Business Times, 4 Mar 2010