Cash-rich firms spot growth opportunity here as cooling steps take effect at home

CHINESE developers eager for a slice of the red-hot housing pie are nudging their way into Singapore’s property scene.

Chinese developers bid for at least 10 out of the 15 residential land sites put up for tender in the Government Land Sales (GLS) programme for the first half of this year.

They have landed three plots and narrowly missed out with second-place bids on at least two other sites.

MCC Land and Qingjian Group are two of the most active, although lesser-known Ningbo Construction Group unsuccessfully bid for a private residential plot in Tampines Road in May.

Property experts say this might herald a growing trend as Chinese developers, cashed up and eager to mitigate cooling measures that could derail property prices in China, shift their focus to Singapore where prices are expected to keep rising.

Their aggressive bidding could also be due to their lack of a landbank compared with local developers, and that many of their initial bids had failed to top the tender, experts say.

Mr Colin Tan, research and consultancy director of Chesterton Suntec International, said: ‘Singapore is preferred as it is seen as a stable and safe market.

‘Chinese developers will probably expand their presence here and I won’t be surprised if we see more mainland firms coming into the property market.’

DMG & Partners property analyst Brandon Lee said that as most of the Chinese firms started out in the construction business, progressing to property development was not surprising as the margins were much higher.

‘There are also an increasing number of mainland Chinese buyers entering the market, making up about 15 per cent of total foreign buyers, so the Chinese developers might be hoping to target this segment,’ he added.

MCC Land’s first attempt at a GLS tender was in March, for an executive condo site near Buangkok MRT Station. It fell a fraction short, tendering 1.4 per cent below the top bid of $193.3 million.

But it won the day with a $127.8 million bid for a site at Yishun, also in March. Last month, the firm clinched a Sembawang Road/Canberra Drive site for $131.7 million.

MCC Land is part of the Chinese state-owned enterprise Metallurgical Corporation of China (MCC Group) – a Fortune 500 company listed on the Shanghai and Hong Kong bourses. It is involved in engineering, procurement and construction, mining and property development.

While MCC Land is a new entrant, MCC Group’s local construction unit, China Jingye Engineering Corporation, has been doing business here for almost 14 years. It was the main contractor for Universal Studios at Resorts World Sentosa.

MCC Land managing director Tan Zhiyong said that it was a natural progression to branch out into property development as it expanded its footprint here.

Although the firm is mostly involved in the residential market, he does not rule out entering the commercial sector if the opportunity arises.

‘We don’t have a fixed goal in terms of what we want to accomplish… If a good opportunity arises, we will act but this also depends on how the market moves, the timing and the location of a site,’ he said.

Mr Tan added that while he does not expect property prices here to increase as fast in the rest of the year as they did in the first half, he expects values to remain stable and so might bid for more sites.

The other main player – the Qingjian group – also began operations here as a contractor for HDB projects. It marked its first foray into property development in 2008 with Natura Loft – an HDB design, build and sell scheme in Bishan.

Qingdao Construction – part of the Qingjian Group – has since clinched a site next to Potong Pasir MRT station for $113.7 million. Its bid of $607 per sq ft per plot ratio was a record land price for the area and ahead of more established property players like Frasers Centrepoint, Far East Organization and Hong Leong Holdings.

Qingdao Construction director Zuo Haibin said Singapore’s growing economy provided a stable investment platform. He hopes to at least double the size of the firm’s development arm in the next year and has identified sites in the upcoming GLS programme the firm may bid for.

Source: Straits Times, 26 Jul 2010

New covered linkways, new windows and grilles in homes possible

SOME 54,000 households in Hougang, Tampines and Pasir Ris can look forward to new amenities in their neighbourhoods with upgrading works now under way.

The improvements could include new covered linkways, car porches and upgrading of children’s playgrounds.

Residents may also get upgrades to their flats, such as new waterproofing for their bathroom floors, and new windows and grilles.

No target completion date has been given for the works but the Government has set aside an extra $550 million for the three HDB towns under the Main Upgrading, Interim Upgrading and Lift Upgrading programmes.

As long as the Government had the financial resources, it would continue to rejuvenate housing estates, said Deputy Prime Minister and adviser to Pasir Ris-Punggol GRC grassroots organisation Teo Chee Hean yesterday. He was speaking at the launch of a community roadshow in Tampines Central to cap HDB’s 50th anniversary celebrations.

Tampines, Hougang and Pasir Ris are mature towns that were developed in the 1980s and early 1990s. Together with the newer towns of Sengkang and Punggol, they are home to 197,100 flats, about 22 per cent of the total number of HDB homes in Singapore.

Some $540 million has already been spent to improve amenities for more than 67,000 households in the three towns.

Of the extra $550 million, around $263 million will go towards estates in Tampines; $180 million to Hougang and $107 million to Pasir Ris.

Mr Teo, noting how the three housing estates have transformed over the years into modern and bustling towns, said commercial and other social facilities will also be upgraded to keep up with renewed residential areas.

For example, six sites in Tampines and Hougang have benefited from HDB’s Revitalisation of Shops Scheme (ROS) to increase the vibrancy and competitiveness of shops in the heartland.

Under the scheme, HDB provides partial funding for shopkeepers to spruce up their shopfronts and carry out promotions to attract more customers. The scheme will be extended to seven more sites in the two estates.

Loyang Point shopping centre in Pasir Ris will also be revamped at the end of the year.

Long-time residents welcomed the improvements to their neighbourhoods and shopping areas.

Mr Lee Kam Mun, who has lived in Tampines Central since 1998, said residents have got a lot out of the upgrading programmes.

Said the 42-year-old terminal manager in the oil and gas industry: ‘We have a nicer outlook in the estate. You come back and feel relaxed. There are also more common areas that encourage us to meet and make friends with neighbours.’

Source: Straits Times, 26 Jul 2010

MERCHANTS of the former Serangoon North Neighbourhood Centre are giving the thumbs up to their newly upgraded shopfronts and walkways.

The area, known for its many pet shops, has been renamed Serangoon North Village under the Housing Board’s Revitalisation of Shops scheme.

At a dinner marking the completion of the two-year $6-million project, Aljunied GRC MP Lim Hwee Hua said it was important to give new life to shops in the area.

‘As you have more malls coming up, the shops experience competition. Therefore we want to ensure that they will always remain attractive to residents because they are actually more conveniently located,’ said the Minister in the Prime Minister’s Office.

Mrs Lim and fellow Aljunied GRC MPs – Foreign Minister George Yeo, Senior Minister of State (Foreign Affairs) Zainul Abidin Rasheed, Madam Cynthia Phua and Mr Yeo Guat Kwang – launched a sign with the area’s new name located on top of Block 153 Serangoon North Avenue 1.

The revitalisation scheme upgrades the shopping environment and business operations of shops in town or neighbourhood centres. Works include flattening uneven ground, building walkways and creating spaces for residents to mingle.

The new Central Plaza between Blocks 151 and 152, for instance, has space for carnivals and performances. There is also a ‘Pet Walk’ promenade for pet shops.

‘The grassy ground outside our shops used to be very uneven. It would also get muddy and smelly when it rained,’ said Dr Edmond Tan, 51. He runs a veterinary surgery in the area. With the land flattened and walkways built, it has become more accessible to the elderly.

Serangoon North is one of three sites with such upgrading works completed this year. The others are Teck Whye Shopping Centre and Bedok Town Centre.

Dr Tan, who is first vice-president of the Serangoon North Merchants’ Association, worked with the HDB and Aljunied Town Council to implement the scheme.

It was not easy carrying out the works, he admitted. The association took six months to persuade the 123 shops in the area to commit to the scheme.

Under the scheme, the HDB and town council foot half the bill, up to $10,000 for items directly benefiting shops such as awnings. Shop owners bear the rest of the cost.

Shop owners and residents also had to put up with the inconvenience of upgrading works.

For Madam Toh Ah Hong, fewer customers came to her incense shop once upgrading started.

‘But business is picking up now, especially on weekends. It’s cleaner and roomier,’ said the 47-year-old.

Mrs Lim said the town council tried to dovetail the project with its regular upgrading works and the Lift Upgrading Programme. This minimised inconvenience for residents and shop owners.

Source: Straits Times, 26 Jul 2010

Record boost to supply should stabilise prices in about a year, he says

PRICES of HDB resale flats are high at present because of an ‘imbalance’ in supply and demand, which should be redressed by the record number of flats being released by the HDB this year.

The boost to supply should stabilise prices in about a year or so, said National Development Minister Mah Bow Tan yesterday, as he sought to address concerns over the cost of HDB resale flats, which has climbed steadily since 2008.

Speaking on the sidelines of a community event in Tampines, Mr Mah attributed the surge to strong economic growth and demand from first-time buyers, such as newly married couples, and owners looking to upgrade to bigger flats.

‘I think at this point in time, there’s still an imbalance,’ he said. ‘I hope that with HDB pushing out a record number of flats this year, this imbalance will be redressed over the medium term. I would expect that in another year or so, we should be able to stabilise everything.’

HDB launched almost 9,000 new build-to-order flats in the first half of the year, and will launch another 7,200 in the second half. The number is about 80 per cent more than for last year.

In addition, there are some 4,700 new flats under the design, build and sell scheme, in which HDB flats are built by private developers, and the executive condo (EC) housing scheme. In the pipeline are four more EC sites in Punggol, Pasir Ris, Bukit Panjang and Tampines, which should yield 1,900 units.

Resale prices for HDB flats rose for the eighth straight quarter between April and last month, surging 4.1 per cent from the previous quarter.

In the first half of this year, 17,598 resale applications were registered with HDB, compared to 16,630 for the same period last year and 14,121 in 2008.

The median cash over valuation (COV) – the cash amount paid upfront by a buyer over a flat’s valuation by the HDB – also hit a record $30,000.

Mr Mah acknowledged this was ‘equally a concern’ as it made resale flats even less affordable, and urged first-time buyers to purchase their new home directly from the HDB instead.

He said: ‘If you are a first-timer, then go for the build-to-order (BTO) market, where there is zero COV, where the prices are lower, where the flats are of newer design and so on.’

To newly married couples who say they cannot wait that long for a new flat, Mr Mah said the three-year waiting period was ‘the norm for our standard, which is already higher than other cities’.

He added: ‘If you want to, say, have a flat, zero waiting time, then obviously the price of the flats will be higher, and this is where the resale flat market comes in.

‘That’s why you have a disparity in price between resale flat and new flats. This cost difference reflects the time difference.’

Mr Mah said there were enough homes for first-time buyers and the increased number of flats being built would relieve the pressure on the resale market.

In the short-term, he said, it was not clear if prices would continue to rise.

‘The economy for the first half was very strong, but all indications are that it may not be so smooth going in the second half; all indications are that there may be some slowdown. If that comes about, then obviously the demand for housing will also slow down,’ he said.

PropNex chief executive Mohamed Ismail said the biggest group of people driving up the resale prices are owners of HDB flats who are motivated by the peak prices to sell.

‘The majority of those who bought new four- and five-room HDB flats eight years ago, can probably make more than $100,000 cash profit now,’ he said.

Newlyweds said getting a new flat from the HDB had its difficulties too.

Civil servant Jonathan Fong, 31, and wedding videographer Mylene Tong, 29, failed twice to get a new flat in the locations they wanted.

They eventually bought a three-room flat in Sin Ming Road in March for $237,000, with a COV of $29,000.

Source: Straits Times, 26 Jul 2010

(SINGAPORE) Prices of resale flats should stabilise in a year or so as the Housing & Development Board (HDB) releases a record number of new flats into the market.

This was according to National Development Minister Mah Bow Tan, who spoke on the sidelines of HDB’s 50th anniversary celebrations at Tampines yesterday.

Resale flat prices have been climbing in the last few quarters and they rose 4.1 per cent in Q2 from Q1 to a new high.

There is an ‘imbalance’ in the resale flat market, Mr Mah said. With the economy doing well, demand for resale flats from both first-time buyers and upgraders has been strong.

‘I hope that with HDB pushing out a record number of flats, this imbalance will be addressed over the medium term,’ he said. There should be stability ‘maybe in another year or so’.

HDB will be launching 16,000 build-to-order (BTO) flats this year, 80 per cent more than in the previous year. Another 4,700 flats from executive condominium projects and the Design, Build and Sell scheme are potentially coming up.

It would be hard to say how resale flat prices will move in the short term, Mr Mah said. ‘The economy for the first half was very strong, but all indications are that it may not be so smooth going in the second half.’

If the economy cools, ‘the demand for housing will also slow down,’ he said.

Accompanying the rise in resale flat prices was a hike in cash premiums which buyers pay. The median cash over valuation (COV) across all resale deals in Q2 was $30,000, up from Q1′s $25,000.

Rising COVs are a concern but they are determined by demand and supply in the market and the government cannot intervene, Mr Mah said.

He advised first-time buyers to turn to the BTO market ‘where there is zero COV, where the prices are lower, where the flats are of newer designs,’ he said.

Source: Business Times, 26 Jul 2010

(SINGAPORE) Consumers in Singapore remain among the most optimistic in the region – despite a drop in consumer confidence in the second quarter.

The Consumer Confidence Index of Singapore, as measured by InsightAsia, fell 12 points to 126 in Q2 after witnessing a strong upward trend since the lowest point of the recession. Singapore is still far above the neutral point of 100.

Consumers were thrilled when the economy emerged from the recession sooner than expected and are now becoming accustomed to positive economic circumstances.

InsightAsia, a market research group specialising in the Asia-Pacific region surveyed 10,800 people across six Asian markets.Although economic growth in Singapore continues to accelerate, consumers expressed lower confidence in economic circumstances. The downward correction of the Consumer Confidence Index is in line with other countries in the region that are also showing healthy growth figures. China, Malaysia and Vietnam also saw a decrease in consumer confidence – even though their economies are in good shape and have GDP growth forecasts of 5-10 per cent in 2010.

An unexpectedly swift recovery from the recession led to increasing consumer optimism, which then dropped slightly in Q2. Consumers in these countries remain confident, but their initial enthusiasm has waned somewhat.

Consumers in Singapore still feel that the economy is improving, though not as strongly as before. They have also moderated their expectations for future economic growth. Singaporeans maintain a high level of satisfaction with their financial well-being, but have moderated their optimism about the coming year.

Overall, Singaporean consumers still have a very positive view of economic circumstances, resulting in a Consumer Confidence Index of 126.

Singapore trails slightly behind Vietnam (128) but leads Malaysia (118), China (114), Indonesia (93) and Thailand (83); all countries that are recording positive growth figures.

Singapore’s recovery from the recession continued into Q2. A record year-on-year GDP growth of 19.3 per cent outstrips the 16.9 per cent growth recorded in Q1 and far exceeds growth figures of other economies in the region.

This very strong growth was driven by exports and tourism. Exports increased particularly through pharmaceuticals and electronics, while new attractions drew more tourists to the island state.

The year-on-year growth figures are calculated against a low base, as the beginning of 2009 was the low point of the recession. Growth in the remaining quarters of 2010 will be calculated against higher base figures. Therefore GDP growth is expected to decelerate in the second half of 2010 and full-year growth is expected to register at 13-15 per cent.

The robust economic growth of China has benefited many other economies in the region. The Chinese government is taking measures to reduce the risks of overheating the economy. Lower demand in China will reduce the exports of other countries in Southeast Asia.

Along with a debt crisis in the EU and the hesitant recovery of the US economy, this may slow growth in South-east Asia in the second half of 2010. However, analysts are positive about growth prospects in the region. The IMF estimates regional economic growth for 2010 and 2011 of around 6 per cent.

The writer is head of Consumer Confidence Index at InsightAsia Research Group

Source: Business Times, 26 Jul 2010