MORE executive condominiums (ECs) will be built this year to meet the housing needs of the ’sandwiched group’, said National Development Minister Mah Bow Tan yesterday.

This group refers to couples who do not qualify for new Housing Development Board (HDB) flats because their combined monthly income exceeds the $8,000 cap, but who may find private property too expensive.

Mr Mah, who was a guest on Channel NewsAsia’s programme Talking Point aired last night, said that ECs will make up about 10 per cent of the approximately 12,000 new flats to be built this year.

Dr Lim Wee Kiak, the MP for Sembawang GRC, and Ngee Ann Polytechnic real estate lecturer Nicholas Mak were the other guests in the show hosted by Channel NewsAsia managing director Debra Soon.

‘It is well-designed, has good location, it is something that will have all the amenities and at the same time you can enjoy the grant… That is the reason why we will be putting more ECs on the market,’ Mr Mah said.

He added that since the HDB caters to about 80 per cent of the population with incomes ranging from the low to the upper-middle, ECs will be one housing form that the Government will keep tabs on.

‘We have recently let out two tenders. And if there is a market and there is a demand, we will let out more,’ he said.

ECs come with condominium facilities but have initial sale restrictions similar to those for public housing. They become a private property fully only after a decade.

They were introduced in 1995 to bridge the gap between public housing and private apartments, aimed at Singaporeans who could afford more than an HDB flat but might find private property out of their reach.

The gross monthly household incomes of buyers of new EC units cannot exceed $10,000.

Responding to a question by Dr Lim that the aggressive bidding of the two recently closed EC tenders in Sengkang and Yishun might push up EC prices, Mr Mah said that developers are mindful of the monthly income cap of buyers and thus would not bid too excessively.

PropNex chief executive Mohamed Ismail told The Straits Times after the show that with these two sites expected to yield 905 units, he expects to see at least one more site offered this year. There could even be two more ECs if the demand for these initial projects are strong, he added.

Rising public housing prices have been a hot topic among Singaporeans. Early this month, HDB raised the minimum occupation period for resale flat buyers to three years, up from as little as one year, to cool speculative demand for HDB flats.

Asked if the measure was too mild, Mr Mah said it was a calibrated move to remove some froth caused by speculative demand. It was not meant to crash prices or curtail genuine demand from home buyers.

Several suggestions to meet buyers’ demand for flats were offered during the 45-minute talkshow. Mr Mak suggested reexamining the buyer’s selection process to assess why so many first-time applicants rejected their flats while Dr Lim asked if the differential in the pricing of less attractive units compared to the more desirable ones is big enough.

Mr Mah emphasised the unique role that HDB had to play – catering to different segments of income groups, to provide both home-ownership and eventually a source of retirement income.

Despite buyers’ unhappiness over rising prices, the public housing market is generally best left to market forces, Mr Mah added. But he also promised that first time buyers of new HDB flats will not be priced out of the market.

Source: Straits Times, 15 Mar 2010

It is now a highly-prized HDB development.

But the Pinnacle at Tanjong Pagar might not have been built if National Development Minister Mah Bow Tan had not won over his colleagues in the Cabinet.

With the prime land slated for residential development, “the question facing us was whether we should have built private property – that means tender out the land for private property – or built HDB”, Mr Mah revealed on Sunday night on Talking Point, a news analysis programme on Channel NewsAsia.

Mr Mah “convinced” his fellow ministers of the need to rejuvenate the area – “that we continue to have younger people moving into that area and that HDB owners are still able to live in a relatively expensive area in downtown”.

While one viewer had found it “unbelievable” that Pinnacle flats were being sold between S$500,000 and S$600,000, Mr Mah said it was a question of location and of the Housing and Development Board (HDB) catering not just to the low income.

“Our housing (income) ceiling goes all the way up to S$8,000, which is, by any standards, upper-middle income, and that’s why we have to build many different varieties of flats, and the Pinnacle is one of them,” said Mr Mah.

HDB will also build more executive condominiums – now about 10 per cent of flats built – if demand goes up.

But the majority of flats will still be three-, four- and five-roomers in non-mature estates. And “we make sure we don’t overbuild because once you overbuild, you’ll make flat prices in future go down, and that’s not what we want”, he said.

Public housing prices was one of the key issues in the special 45-minute show, hosted by Channel NewsAsia’s chief editor Debra Soon, which also featured Member of Parliament Lim Wee Kiak (Sembawang GRC) and Ngee Ann Polytechnic real estate lecturer Nicholas Mak.

High cash over valuation (COV), in particular, has been a bane to some home buyers, especially those with ample Central Provident Fund (CPF) money but not cash, said Dr Lim, who wondered if the valuations given by private valuers to HDB need to catch up with the market.

But COV could also act to “retard” price growth, Mr Mak told MediaCorp, “since most buyers have limited cash to pay for the COV”.

“If the valuation of the flat is growing at a slower rate, the rate of growth of resale prices can decelerate,” he explained after the show.

As to whether valuations are moving too slowly, Mr Mah said the time gap has been “shortened considerably” to a “matter of weeks”.

A more fundamental question is whether Singaporeans want the government to control resale flat prices, said Mr Mah.

“When people talk about controlling COV … they’re talking about dampening prices, they’re saying let’s ban COVs,” Mr Mah told Dr Lim, who asked for “a little bit more” in grants to those who buy resale. “If we control resale flat prices, we’re actually moving away from the free market, which fundamentally would not be in the interest of homeowners.”

On the recent measures to curb speculative demand in the resale market – increasing the Minimum Occupation Period from one to three years – Mr Mah said that it was not a “blunt instrument” as Mr Mak felt, but “very calibrated, very measured”.

While some people might want the Government to do more so that prices fall faster, Mr Mah stressed that only a specific group of people who are not buying for home ownership and the long term were being targeted.

“You can call it speculation – some people can say they just want to buy short term, some people want to buy for rental yield,” he said.

While the numbers in this group are small, they are starting to grow, so HDB raised the hurdle for them.

As to why HDB owners are allowed to buy private property, Mr Mah said, “This is an upgrading opportunity I think all Singaporeans would like to have. They would like to see their lifestyles improve.”

According to Dr Lim, there is “grumbling on the ground” about people buying HDB flats and not living in them.

To which Mr Mah said the HDB would “take drastic action” against those who exploit the rules.

“When you hear of those cases, you let us know,” he said, two days after the HDB announced it had repossessed one flat for unauthorised subletting, following a tip-off.

Source: Today, 15 Mar 2010

Executive condominiums (ECs) are back in the spotlight, amid a buoyant property market. They come with finishes similar to a private condominium, but are priced more affordably.

Analysts expect strong interest for two new developments to be launched at the end of the year. But they also caution buyers against being too hasty.

When the Eastvale executive condominium in Pasir Ris was launched, units were going for about S$400 per square foot. A recent sale went for S$600 per square foot, comparable to similar private properties in the area.

Executive condominiums were launched in the mid-1990s, and Eastvale was one of the first projects. They cater to the needs of the “sandwiched” class – buyers who could not afford private properties, but whose household incomes exceed the income ceiling set by the Housing and Development Board (HDB).

Now 15 years on, calls by the “sandwiched” class for more affordable housing are growing, and housing authorities said executive condominiums will form 10 per cent of new flats built this year.

For first-time home buyers, they can apply for a S$30,000 housing grant, as long as monthly combined incomes do not exceed S$10,000. And after a period of 10 years, they can sell them in the private property market.

In line with HDB rules, these units are first subject to a five-year Minimum Occupation Period, after which they can be sold only to Singaporeans and Permanent Residents (PRs).

With interest rates remaining low, it sounds like a good deal. But with a economy recovering, analysts cautioned that interest rates could head higher.

Colin Tan, head of Research & Consultancy at Chesterton Suntec International, said: “Because of all the various government stimulus spending, interest rates have been kept artificially low for quite a long time.

“With a low interest rate environment, it’s easy to put money down and meet the mortgage instalments. But when interest rates double or triple, you expect your mortgage to be doubling or tripling. So the question is, are you able to sustain that.”

Analyst Mohamed Ismail of Propnex said that while such developments perform well in the resale market during boom times, resale prices tend to go down much faster than similar private properties when the market hits a snag.

Tan agreed, saying it is hard for ECs to shake off their image as the “poorer cousin” of private condominiums. One reason is because developers may compromise on the quality of finishes in order to meet the budgets of buyers.

So if the private property market is subdued, as it was in the post-SARS years, then between an executive condominium and a private one, buyers would be more willing to fork out for the latter.

Chua Yang Liang, head of Research (Southeast Asia) of Jones Lang LaSalle, said the increase in executive condominium projects may not impact greatly on the private property market as EC buyers are a select group of buyers, most likely the “sandwiched” class.

He said entry-level mass market private home prices have averaged S$800 per square foot in recent months, and the executive condominiums will have to be priced lower.

“Going by the recent transactions, it’s averaging about S$550 to S$650 psf, so pricing in that market would be around that region – S$550, S$650, and S$750 psf, that kind of range,” said Chua.

Source: Channel News Asia, 15 Mar 2010

THE property market may still be sizzling, but at least one property developer here is offering a carrot which has not been seen in more than a year to entice buyers and boost sales.

The incentive – stamp duty absorption – is usually deployed by nervous developers during market downturns, but is now on offer at the 360-unit Concourse Skyline on Beach Road.

The deal, which can save homebuyers about 3per cent of the price, has been used extensively during market slumps.

However, industry experts say it has not been used since 2008, except on a one-off case-by-case basis.
They say the developer which has advertised the offer, Hong Fok Land, may be trying to ameliorate the effects of recent anti-speculative market-cooling measures unveiled by the Government.

However, some suggest the move may simply be a bid to counter slow sales at the project.

The offer at Concourse Skyline applies to selected units till April17. Hong Fok said the promotion was timed to coincide with the slated opening of the city leg of the Circle Line that same day. It draws attention to the development’s accessibility and convenience, a spokesman said.

Stamp duty absorption is similar to the interest absorption scheme which was abolished by the Government last September as part of market-cooling moves.

Under the interest absorption scheme, buyers had to take out a bank loan at the time of purchase but the developer absorbed interest payments until the project’s completion.

Property consultants The Straits Times spoke to were unaware of any similar offers being made openly – and said buyers should not hold their breath waiting for more to be touted.

Most said this was likely to be a unique case. The market is still hot, with sales and prices rising, so it is unlikely other developers will follow suit.

Buyers have needed no prodding, with sales of new private homes by developers rising to 1,476 units in January – three times as high as the previous month and the highest level since August last year.

Some property experts said, however, that this unusual move could be aimed at improving poor sales at Skyline.

They said the developer was ‘too optimistic about its pricing’ – which ranged from $1,500 to $1,800 psf – when it was first launched in September2008.

It was the same month that US investment bank Lehman Brothers collapsed, sparking the global financial crisis.

While 68 units were sold within the first month after the launch, sales have since tapered off to an average of about eight a month over the past 16 months.

A total of 170 units had been sold as of January this year, according to the Urban Redevelopment Authority’s website.

Ms Tay Huey Ying, director of Colliers research and advisory, said absorbing stamp duty was a developer’s way of enticing homebuyers.

In the past, developers had rolled out gimmicks such as renovation allowances and vouchers for electrical appliances in a bid to boost flagging sales.

Said Ngee Ann Polytechnic real estate lecturer Nicholas Mak: ‘These measures (by the Government) are expected to shave off about 1,000 homes sold yearly…So offering absorption of stamp duty might be a way for developers to increase sales.’

Chesterton Suntec International research and consultancy director Colin Tan said that absorbing stamp duty would lower a buyer’s costs without bringing down valuation prices, which is a key market indicator cited by developers.

The ‘uncommon move’, said Mr Steven Tan, executive director of
OrangeTee’s residential division, might be to encourage homebuyers to revisit the showflat, since newer launches have served as stiff competition.

Colliers’ Ms Tay added that the absorption scheme would cushion the expense of those who might be thinking of selling the property within a year of purchase.

Last month, a seller’s stamp duty was introduced to deter short-term speculators. It requires sellers to pay a levy of about 3per cent if they offload a property within a year of purchase.

Hong Leong Holdings’ Aalto in Jalan Kechil, near Meyer Road, which first started sales in August 2007, has also seen slower sales with only 118 of its 196 units sold as of January.

However, when contacted, Hong Leong said it would not be absorbing stamp duty for that project.
Concourse Skyline is a 99-year leasehold project consisting of one- to four-bedroom apartments and penthouses. It is expected to be completed in 2013.

Source, Straits Times 15 March 2010