LAST Thursday’s report, ‘New monthly index of private home prices’, is constructive for the long-term development of the local property market.

It provides for greater price transparency which allows the market and regulators to work more efficiently.

In cases where different statistics indicate conflicting states of the property market, the new index can also act as a principal gauge against which these other statistics are compared.

This is due to its fairly comprehensive nature comprising ‘74,359 units in 364 projects across 26 postal districts’.

However, the inclusion of only completed homes may not be a sound practice. While there is reason to exclude ‘outlier’ deals where prices are exceptionally high or low, new launch and sub-sale prices can form a portion of the index.

This proportion should certainly be smaller than completed homes but not including them would affect the representativeness and accuracy of the index. People may inaccurately use the index to gauge property prices when considering the purchase of a new condominium launch.

Furthermore, there seems to be a premium charged for new property launches and their non-inclusion would understate the index.

As a principle, the index should give representation to segments of the market which are significant and non-completed homes fit that criterion.

The index is a significant step forward but its composition must not be too restrictive. This is especially so if it is used as a benchmark by property participants and the basis of financial derivatives.

Loke Hon Yiong

Source: Straits Times, 29 Mar 2010

MORE public buildings and land will be released by the Government for up to three more foreign schools to meet the schooling needs of the growing expatriate community.

At full capacity, the three schools can take in between 4,500 and 7,500 students.

Currently, there are 94,000 international students enrolled in government and private schools here.

The new foreign schools can occupy the former Chong Boon Primary School in Ang Mo Kio Street 44, the former Nan Chiau High School in Kim Yam Road and three empty sites in Bukit Batok Road, Punggol Field Walk and Yishun Avenue 1.

The first can open as early as 2013 and the other two within the next five years after that, to add to the 41 international schools operating here already.

This is the second time that the Government has released vacant land and properties to meet the schooling needs of the growing expatriate community.

In 2008, the Economic Development Board (EDB) announced that seven sites would be made available for up to four international schools to ease the supply crunch situation at that time.

Many international schools then were full, and the popular ones had long waiting lists. The shortage of places was so dire that it was a stumbling block for companies looking to bring in expatriate employees and their families.

When contacted, Member of Parliament Josephine Teo, the chairman of the Government Parliamentary Committee for Education, estimated that the three schools, if constructed, will ease the supply crunch – for now.

However, it remains to be seen if they would be sufficient in the long run as Singapore positions to be an attractive Asian hub for global talent, she told The Straits Times.

‘It will be a matter of time before the additional places may not be enough and we will need to review the situation,’ she said.

When asked if the expatriate community should consider Singapore schools for their children, Mrs Teo said there is already a growing number of foreigners who send their children to schools here to immerse them in a Mandarin-speaking environment.

However, expatriates may still prefer to send their children to international schools, she said.

Typically, most stay here for a few years before going back to their countries and prefer to send their children to international schools which they are more familiar with and can get used to quickly, Mrs Teo added.

The supply crunch had eased considerably since last year when a new international school Stamford American International School was set up. Older schools such as the United World College of South East Asia and the Australian International School Singapore have also expanded their premises.

The EDB’s executive director of human capital and professional services Toh Wee Khiang said that demand for places in international schools held strong last year despite the recession, and is expected to grow as the economy bounces back.

The EDB received more than 20 proposals in 2008 and Mr Toh expects the response from interested schools this time round to be ‘comparable’.

He said proposals would be assessed on factors such as quality of education programmes, track record, and investment commitments.

The EDB may make available other plots of land for international schools in the future based on strength of demand, he added.

Source: Straits Times, 29 Mar 2010

Banking regulator steps up efforts to prevent bad debt and asset bubbles

China’s banking regulator ordered lenders to take more care when making real-estate loans, widening efforts to prevent property speculators from causing asset bubbles and bad debt.

Banks should not lend to developers found by state agencies to have held land without building houses, the government said in a statement posted online on Friday evening.

They should also stop approving new lines of credit to 78 government-controlled companies whose core business isn’t property development if they use collateral other than construction projects already in progress, the statement said.

China’s property prices rose 10.7 per cent last month, the fastest pace in almost two years, fuelling concerns that record lending and inflows of capital from abroad are creating asset bubbles in the world’s third-biggest economy.

The government this month raised deposit requirements for buyers at land auctions to 20 per cent of the minimum price to raise costs for developers. It also lifted banks’ reserve requirements twice this year and re-imposed a tax on home sales.

‘We have to closely monitor China’s asset bubbles,’ Liu Mingkang, chairman of the China Banking Regulatory Commission (CBRC), said on Friday at a conference here. Property prices have changed ‘quite a lot in the past five years,’ he said.

Former Federal Reserve chairman Alan Greenspan on Friday said there are ‘bubbles’ in China, without indicating whether they were in property and stocks. ‘There are significant bubbles in Shanghai and along the coastal provinces, but there’s some of that going back into the hinterlands as well,’ Mr Greenspan said in an interview on Bloomberg Television.

The regulator’s latest order underlines concerns that banks may be at risk from companies that are speculatively raising capital backed by property investments. Banks must carry out ’serious’ examinations of developers that are repeatedly using the same pieces of land as collateral for loans, the regulator said in the statement.

‘These measures are intended to urge developers with land to build houses and sell them quickly to increase market supply,’ said Zhao Qingming, a senior analyst at China Construction Bank Corp, the nation’s second-largest lender. ‘It may curb fast growth in housing prices, but more measures are needed to tackle the root issue, including controls on land prices and speculative house-purchase investments.’

‘We ask banks to check the qualifications of the developers and they must have a face-to-face check,’ the CBRC’s Mr Liu said.

There are ’serious’ bubbles in property prices in China’s big cities as about 60 per cent of the residents can’t afford to buy a ordinary apartment, China Construction’s Mr Zhang said.

Source: Business Times, 29 Mar 2010

Since last June, the transaction prices of apartments at Amaryllis Ville, along Newton Road, have increasingly crossed the $1,000 psf level. In January, prices at the 311-unit twin-tower condo development came close to the 2007 peak of $1,514 psf, when a 656 sq ft unit was sold for $900,000, or $1,371 psf. Lately, the number of transactions has also started to pick up, with 20 transactions from Jan 1 to March 9, compared with only 10 from October to December 2009.

Apart from the overall buoyant property market lifting prices higher, the proximity of the development, completed in 2004, to new launches like Wing Tai’s L’Viv and Ho Bee’s Trilight on the other side of Newton Road could have contributed to the pick-up in sales and rise in prices at Amaryllis Ville.

Wing Tai officially launched L’Viv, a 147-unit freehold condominium comprising largely one- and two bedroom units, over the weekend of March 20 and 21. Prior to the official launch, half the units had already been snapped up at an average of $2,000 psf. The project, located near the Newton Food Centre and Newton MRT station, is expected to be completed in 2013. Ho Bee’s Trilight, located near L’Viv, saw units going for over $1,800 psf after its launch last October.

Other launches in the Newton Road neighbourhood last year include Lincoln Residences, Rochelle at Newton, as well as Lincoln Suites and Miro at the other end of Newton Road, which is closer to the Novena area. This area has been popular with home buyers, given its proximity to the Orchard Road shopping belt, the CBD, good schools like Anglo-Chinese School (Junior) and ACS Barker Road, and the prime Bukit Timah area.

For the period of March 1 to 9, there were three transactions at Amaryllis Ville, a 99-year leasehold condo, at $1,188 to $1,240 psf.

On March 5, a 1,259 sq ft unit on the 10th floor of one of the two towers was sold for $1.5 million, or $1,215 psf, according to caveats lodged with URA Realis. This represents an 18% gain for the seller, who purchased the unit for $1.29 million three years ago.

At the other tower along 22 Newton Road, a 1,237 sq ft unit on the 16th floor went for $1.5 million, or $1,240 psf. The original owner purchased the unit for $1.2 million, or $969 psf, in 2007, realising a 28% gain on his recent sale. Before this, the unit changed hands at $1.1 million or $889 psf in 2006, and $1 million or $815 psf during the launch in 2003.

Another 1,237 sq ft unit on the seventh floor along 22 Newton Road, went for $1.47 million, or $1,188 psf. The original owner had purchased the unit for $1.27 million, or $1,030 psf, making a gain of 15%.

As is evident from the above figures, with new launches in the Newton area fetching higher prices, older projects nearby are also riding this uptrend.

Source: The Edge, 29 March 2010