Real estate firms in Singapore have axed thousands of agents, ahead of the regulatory framework to be implemented by the National Development Ministry.

The framework seeks to professionalise the industry, with the introduction of a new statutory board, known as the Council for Estate Agencies, and enhanced regulatory guidelines.

Channel NewsAsia understands that a Bill for the framework could be introduced in Parliament as early as October.

When contacted, the Ministry would only say that a Bill will be introduced in the second half of this year, with the Council operational by year-end.

Director of Dennis Wee Group, Chris Koh said: “It’s going to be difficult for agents with a full-time job while moonlighting as an agent. Because the moment the employer goes into this public registry, the employer will know that you are an agent, and you stand to lose your existing full-time job.”

Earlier this month, Dennis Wee Group’s (DWG) housing agents were called back to their office to update their personal information and be briefed on the requirements of the new regulatory framework. The information collected was then submitted to the National Development Ministry, to be part of a new central registry of all agents.

1,500 of 5,000 agents were axed as a result of the exercise – mostly inactive or part-time staff.

Under the new guidelines, agents will also be required to pass a mandatory industry examination. Only those who already have industry certification will be exempted.

Rather than wait for the new examination, DWG has asked all its agents to get themselves certified with either the Certified Estate Agent Course or the Common Examination for Salespersons.

Another firm, PropNex, terminated 1,200 agents at the start of this year, either because they were inactive or unwilling to take up personal indemnity insurance.

The insurance covers any financial liabilities arising from housing transactions.

Agents associated with money-lending were also released.

CEO of PropNex, Mohd Ismail said: “Any PropNex agent who has a money-lending licence will not be allowed to practice. He or she will have to make a decision, because we do see a conflict of interest. We have terminated an agent who has been very active, however, he wanted to maintain both and that was not acceptable to us.”

ERA, which has about 3,000 active agents, says it removes about 100 inactive agents from its database every month.

Associate director of ERA Asia Pacific, Eugene Lim said the company has also been conducting training to prepare their agents for the Common Examination for Salespersons.

To date, more than 2,500 ERA agents have taken this exam, with some having to do retakes for the paper.

HSR, which represents some 7,000 agents, says it regularly checks its database for inactive agents who are then put on a passive list and sent reminders to go for retraining.

There are an estimated 30,000 housing agents in Singapore.

The National Development Ministry has also been in consultation with various real estate firms to standardise documents used in the trade.

These include documents governing an agent’s exclusive right to sell a property.

Currently, each agency has its own terms and conditions, which can be confusing for consumers.

Source: Channel News Asia, 27 Jul 2010

WASHINGTON: Sales of new homes last month in the United States rose more than what was forecast following an unprecedented collapse in the previous month, a signal that the worst of the slump triggered by the end of a government tax credit is over.

Purchases increased 24 per cent from May to an annual pace of 330,000, figures from the Commerce Department showed yesterday. The rate was the second-lowest since 1963 after May’s downwardly revised 267,000 pace.

The lowest mortgage rates on record may help underpin demand, stabilising the industry that triggered the worst recession since the 1930s.

Even so, increasing foreclosures are swelling the number of unsold existing homes, putting pressure on prices and keeping buyers on the sidelines as unemployment hovers near 10 per cent and the economy cools.

Sales are ‘bouncing along the bottom’, said Mr Eric Green, chief market economist at TD Securities in New York.

‘The future is going to be dependent on job growth. There’s no demand because confidence is weak and employment is weak.’

Economists forecast that sales would rise 3.3 per cent to an annual pace of 310,000, according to the median of 73 projections in a Bloomberg News survey. Estimates ranged from 260,000 to 360,000.

The government had initially estimated May sales at a 300,000 rate and revised figures downwards for every month since March.

The 37 per cent plunge in May was the biggest on record.

The median price decreased 0.6 per cent from June last year to US$213,400 (S$291,100).

Purchases increased in three of four regions, led by a 46 per cent jump in the north-east and a 33 per cent surge in the south, the largest area.

Demand dropped 6.6 per cent in the west to a record low 57,000 pace.

The report suggested the housing market may be close to working through the distortions following the end of a popular home-buyer tax credit in April, an incentive that brought forward sales.

Data last week showed home construction fell to an eight-month low last month, while existing home sales were the lowest in three months.

To become eligible for a federal incentive worth up to US$8,000, buyers had to sign contracts by April 30 and close deals by the end of last month.

The surge in demand prior to the April deadline prompted the government this month to extend the closing deadline until Sept 30 to ensure buyers had enough time to complete transactions.

BLOOMBERG, REUTERS

Source: Straits Times, 27 Jul 2010

After failed 2008 attempt, it is making another bid, this time with adjoining vacant plot

THE revival in the collective sale market this year is continuing, with a small development and adjoining land parcel in the Novena area the latest to go on sale.

The 50-unit Pastoral View and the vacant plot have a combined asking price of about $130 million to $150 million.

The two sites in Bassein Road have a total land area of 51,395 sq ft and can be built up to some 143,906 sq ft of gross floor area and a height of 36 storeys. They are near Novena MRT station.

Credo Real Estate, which is marketing the freehold sites, said the buyer can choose to build a high-rise tower comprising 140 apartments with an average size of 1,000 sq ft each.

The price translates to a land rate of $904 to $1,043 per sq ft per plot ratio, said its deputy managing director Tan Hong Boon.

This includes a modest development charge of about $157,000 for the plot at 11 Bassein Road to redevelop it.

No development charge is payable for the 10-storey Pastoral View, which was previously put up for sale in early 2008 at an asking price of $95 million without the adjoining plot.

But the market had turned for the worse by the time the tender closed in April that year, and it was not sold.

Credo said buyers can opt to tender for the combined sites or either one.

Pastoral View alone is 34,193 sq ft in size and going for $86.6 million to $100 million. If the sale goes through at the minimum asking price, the estate’s owners will stand to reap at least $1.04 million to $4.56 million each, depending on their unit’s size.

The smaller adjoining plot at 11 Bassein Road is 17,203 sq ft in size. The asking price for the plot alone is about $43.4 million to $50 million. A search shows that it is owned by OCBC Bank.

So far this year, at least 16 sites worth $786 million have been sold en bloc, compared with just one last year at $100.8 million, said Credo.

More sites are expected to be put up for collective sale this year, said Mr Tan.

Source: Straits Times, 27 Jul 2010

Shortage of industry professionals spurs BCAA, SISV initiative

THE booming construction industry over the years has created a shortage of qualified surveyors and other specialists.

As such, in a release by the Building and Construction Authority (BCA), it was revealed that the BCA Academy (BCAA) and Singapore Institute of Surveyors and Valuers (SISV) will put in place a number of initiatives to build up and strengthen the pool of building professionals within the industry.

Among the specialists in demand include quantity surveyors, land surveyors, valuers and property managers.

To resolve this, the BCAA and SISV will be jointly introducing more academic programmes such as diploma, specialist diploma and degree courses to train new professionals and to upgrade the skill sets of existing ones.

BCAA will also be working with SISV to initiate more dialogue sessions with firms in the industry to facilitate discussion on developing such capabilities.

To further promote the building profession, BCA and SISV signed a memorandum of understanding to share resources, promote educational programmes and jointly create and implement new products and services to drive the local building industry forward.

John Keung, CEO of BCA, said, ‘I’m confident that this new collaboration will help elevate the occupational profile in the built environment. BCA looks forward to working with SISV to develop more programmes to train personnel at the technical and professional level to meet the needs of the industry.’

Source: Business Times, 27 Jul 2010

(MUMBAI) Indian real estate firm DLF is buying out the stake held by a property unit of debt-laden Dubai World in an equal joint venture in India for about two billion rupees (S$58 million), The Economic Times reported yesterday.

A unit of DLF will buy the stake owned by Limitless Group, part of Dubai World, in Bidadi Knowledge City in southern Karnataka state, the newspaper said, citing a person with direct knowledge of the transaction.

Dubai World is currently restructuring US$23.5 billion in debt. Limitless said in April 2009 that it was reviewing a US$12 billion residential and commercial project in India because the authorities there had not bought the required land.

India’s DLF and Limitless won the contract to build the Bidadi development on the outskirts of Bangalore in October 2007.

‘Under the agreement, government agencies are responsible for the land acquisition,’ a Limitless spokeswoman said in a statement at the time. ‘Unfortunately, after 18 months, the land acquisition has not advanced. As a result, Limitless and DLF have notified the government that they are reconsidering their position.’

A spokeswoman from Limitless in Dubai declined to comment on the news report yesterday, pointing to the company’s statement from last year.

A representative from DLF was not immediately available for comment. — Reuters

Source: Business Times, 27 Jul 2010

One US town is handing out city land now for future property tax revenues

(BEATRICE, Nebraska) GIVE away land to make money? It hardly sounds like a prudent scheme. But in a bit of deja vu, that is exactly what this small Nebraska city aims to do.

Beatrice was a starting point for the Homestead Act of 1862, the federal law that handed land to pioneering farmers. Back then, the goal was to settle the West. The goal of Beatrice’s ‘Homestead Act of 2010′ is, in part, to replenish city coffers.

The calculus is simple, if counterintuitive: Hand out city land now to ensure property tax revenues in the future. ‘There are only so many ball fields a place can build,’ Tobias J Tempelmeyer, the city attorney, said the other day as he stared out at grassy lots, planted with lonely mailboxes, that the city is working to get rid of. ‘It really hurts having all this stuff off the tax rolls.’

Around the nation, cities and towns facing grim budget circumstances are grasping at unlikely – some would say desperate – means to bolster their shrunken tax bases. Like Beatrice, places like Dayton, Ohio and Grafton, Illinois are giving away land for nominal fees or for nothing in the hope that it will boost the tax rolls and cut the lawn-mowing bills.

In Boca Raton, Florida, which faces a budget gap of more than US$7 million, leaders are thinking about expanding the city’s size and annexing neighbourhoods as an antidote. Sure, more residents would cost more in services, but officials hope the added tax revenues will more than make up for it.

Non-profit organisations

And leaders in Manchester, New Hamshire and Concord, Massachusetts are taking an approach that might have once seemed politically unthinkable: they are re-examining whether their communities’ non-profit organisations really deserve to be tax-free.

‘The stress of the past couple of years is causing us to look absolutely everywhere,’ said Anthony Logalbo, finance director in Concord, where officials realised that 15 per cent of the town’s property value had become tax-exempt and sent letters to non-profit groups asking whether they would consider paying something to the town.

‘Private schools and non-profit museums and community organisations benefit the town in lots of ways,’ Mr Logalbo said, ‘except that they don’t contribute to the cost of running the town.’

Analysts say that this year and next, city budgets will reach their most dismal points of the recession, largely because of lag time inherent in the way taxes are collected and distributed. Despite signs of a recovery, if a slow one, in other elements of the economy, it may be years away for many municipalities. Between now and 2012, America’s cities are likely to experience shortfalls totalling US$55-85 billion, according to a survey by the National League of Cities, because of slumping revenues from property taxes and sales taxes and reduced support from state governments. And even in places like Concord and Beatrice, where officials say budget strains are not severe enough to lead to layoffs or major cuts, a slow chafing has still taken a toll.

Beatrice (pronounced bee-AT-russ), which sits about 65 kilometres south of Lincoln down a highway called the Homestead Expressway, is recognised as home to the first Homestead Act application nearly 150 years ago. That law ultimately granted 270 million acres (109 million hectares) of land in 30 states to nearly anyone who could survive on it and pay a minimal fee.

Daniel Freeman, who came from Ohio, is said to have filed his claim for 160 acres near Beatrice just after midnight on Jan 1, 1863, the day the law took effect. There were others who filed claims in other places on the same day (some say they were actually first), but Freeman captured a place in history. The government paid to take back his Nebraska homestead decades later to turn it into a national monument that honours the Homestead Act and how it transformed the nation’s population.

Beatrice’s new Homestead Act is not the first to revive the land giveaway. Some tiny towns, particularly in the Great Plains, have made such offers before, mainly as a way to increase dwindling populations.

But disappearing is not the fear in Beatrice, which is home to several lawn-mowing equipment manufacturers and where the population has held steady at around 12,000 for decades. Instead, city officials are hoping to return some of the many lots the city has accumulated, because of unpaid taxes or flooding risks from the Big Blue River, and return them to the tax rolls. The city has not suffered gaping budget shortfalls or the property tax declines seen in some larger cities, but some large purchases and road reconstruction are on hold, waiting for a return to flusher times.

If the city were to give away just a few lots – and if people were to, as required by the law, build homes on them and stay for at least three years – Beatrice would secure annual real estate taxes on them, collect money for water, electric and sewer use, and no longer pay to mow the lawns. The arrival of new, improved homes might also have an infectious effect on existing neighbourhoods, said Neal Neidfeldt, the city administrator.

But the plan has its critics; at least one candidate for mayor here wonders what right the city has to give out public land to any non-taxpaying outsider who asks.

Officials acknowledge that the benefits sound modest, in the thousands of dollars annually, but say the revenue is needed. ‘What is the value of a lot to us if it’s empty?’ said Tom Thompson, mayor of Grafton, where an offer of 32 city-owned lots, promoted with a television advertising campaign, has quickly led to eight takers so far. ‘This is strictly financial – a way to go upstream from the trend.’

In Dayton, officials are offering thousands of vacant, foreclosed or abandoned properties under certain conditions for nominal fees – US$500, in many cases, to cover the cost of recording fees or US$1,200 if the city must initiate tax foreclosure proceedings. The prospect of city savings on mowing fees alone is enormous: each year, Dayton spends US$2 million to cut grass on the properties.

Daunting prospect

Back in Beatrice, though, the effort is only creeping along. Since the Homestead Act took effect in May, many people have called with inquiries, but no one has moved onto the lots along a gravel-covered road called Grace. Two families filled out an application – which seeks only a name, address and telephone number – but both have since put off plans.

One applicant, William Hendrix, 47, said the city’s law requiring him to secure permits for a new home on the property within six months, then build within a year after that, was too daunting. What if he could not get loans? What if he could not pay for the construction? What if he built a home but could never sell it?

‘Right now, giving away the land isn’t going to be doing anybody favours,’ Hendrix said. ‘I realised that Beatrice will get the taxes they want, but it won’t do me any good in this market.’

For their part, people in Beatrice sound patient. The peak of homesteading acres claimed under the federal act, they point out, came in 1913, some 50 years after the act’s passage. — NYT

Source: Business Times, 27 Jul 2010

(MADRID) Spanish mortgage lending fell in May for the third straight month after a brief rise in February as the country’s banks, five of which failed a Europe-wide stress test on Friday, continued to withhold credit.

Mortgage lending for homes totalled 6.4 billion euros (S$11.3 billion) in May, down 7.2 per cent from the same month a year earlier and following a one per cent drop in April.

February marked the first annual rise in mortgage lending in almost three years, a brief respite for a battered property sector hit by the credit crunch after a decade of strong growth.

Spain’s mostly unlisted savings banks were heavily involved in expanding the property bubble by providing easy lending conditions to home buyers and property developers.

According to the Bank of Spain, the savings banks which failed the stress tests, which included property value declines of around 30 per cent, would need 1.835 billion euros in additional capital to withstand the worst-case scenario. — Reuters

Source: Business Times, 27 Jul 2010

Decline comes as economy chalks up quarterly growth of 1.5%

(SEOUL) South Korea’s construction industry had its biggest annual contraction since at least 2008 in the second quarter, deepening a dilemma for policymakers faced at the same time with a sustained expansion in the broader economy.

Construction shrank 0.8 per cent over the three months through June compared with the prior quarter, the third drop in four quarters, and 0.5 per cent from a year ago, according to gross domestic product (GDP) data released yesterday by the Bank of Korea.

The decline contrasts with a quarterly growth rate for GDP of 1.5 per cent, which bolstered the case for the central bank to continue raising interest rates.

Concern about economy-wide inflation pressures outweighed risks from falling house prices when the bank increased its benchmark this month to 2.25 per cent from a record low 2 per cent.

‘Policymakers can’t stop raising interest rates just because the construction sector is in trouble, which was already doing badly when rates were at a record low,’ said Lee Sung Kwon, an economist at Shinhan Investment Corp in Seoul.

‘The government is seeking measures to support the industry, but it’ll be difficult to find a good solution unless homebuyers’ sentiment improves.’

The 36-member Korea Construction Index of stocks fell 0.4 per cent yesterday after the data were released, compared with a 0.6 per cent gain in the benchmark Kospi index. The building gauge has tumbled 18 per cent this year, while the Kospi has risen 5.1 per cent.

The government is contemplating steps to boost the property market after home prices in Seoul fell for three straight months through June, according to data from Kookmin Bank, the nation’s largest lender.

The administration of South Korean President Lee Myung-bak, who suffered an unexpected reversal at local elections on June 2, last week delayed announcing the property policy after officials failed to reach agreement on the proposals.

Land Minister Chung Jong Hwan said on July 21 that he doesn’t plan to loosen mortgage-lending controls for now, while Finance Minister Yoon Jeung Hyun said that the nation’s property prices are unlikely to fall sharply.

‘The property market has emerged as a major political concern,’ Park Sang Hyun, chief economist at HI Investment & Securities Co in Seoul, said last week.

South Korea tightened restrictions on mortgage lending last year to slow loan growth. Banks can extend as much as 50 per cent of a borrower’s annual income for purchases of homes in Seoul and 60 per cent for areas outside the capital.

The quarterly gain in GDP reported yesterday exceeded the 1.3 per cent median forecast in a Bloomberg News survey of seven economists. From a year earlier, GDP rose 7.2 per cent.

The growth figures raise the risk of the Bank of Korea boosting rates twice more by year-end, Barclays Capital analysts said yesterday as they increased their 2010 GDP growth projections to 6.1 per cent from 5.7 per cent. — Bloomberg

Source: Business Times, 27 Jul 2010

OCBC, which has owned a site at 11 Bassein Road in the Novena area since the 1940s, has teamed up with the owners of Pastoral View next door who are doing a collective sale, to sell the two properties together.

Both Pastoral View, which is at 7 Bassein Road, and OCBC’s site, at 11 Bassein Road, are freehold.

‘The sellers are expecting offers in the region of $130-150 million. This translates to a land rate of $904-1,043 per sq ft per plot ratio, after factoring in a marginal development charge of about $157,000 payable for No. 11 Bassein Road, to redevelop the site up to a 2.8 gross plot ratio. No DC is payable for Pastoral View,’ said Tan Hong Boon, deputy managing director at Credo Real Estate, which is marketing the two properties.

More than 80 per cent of owners by share value and strata floor area at the 50-unit Pastoral View have signed a collective sale agreement. OCBC’s next door property is an empty site.

The two sites have a combined land area of 51,395 sq ft and can be developed into a new condo with a gross floor area of 143,906 sq ft. This allows for a 36-storey project with 140 apartments of average size of 1,000 sq ft.

The site is zoned for residential use with a 2.8 plot ratio under Master Plan 2008.

Interested parties can bid for one or both sites.

‘We believe developers would find the enlarged site more attractive because it would offer economies of scale and broaden their offering,’ said Mr Tan.

There will be space for the winning developer to build a showflat before Pastoral View residents move out, Mr Tan said. This means that the developer can market the new project earlier, reducing holding costs and market risks.

Novena is home to office and retail blocks such as United Square, and hospitals such as Tan Tock Seng.

Credo believes that the new residential project will attract medical professionals and medical tourists.

Near Pastoral View, units at D’Ixoras have changed hands at more than $1,240 psf in the past two months, based on caveats lodged.

Source: Business Times, 27 Jul 2010

Sale brings in HK$8b for firm, partners as demand stays strong

(HONG KONG) Sun Hung Kai Properties Ltd, the world’s biggest developer by market value, has sold 300 flats at an apartment project in Hong Kong’s Island South district over the past two weekends.

The sale at the Larvotto project has brought in a total of HK$8 billion (S$1.4 billion) in revenue for Sun Hung Kai and partners Kerry Properties Ltd and Paliburg Holdings Ltd, Victor Lui, an executive director at Sun Hung Kai’s agency arm, said in an e-mailed statement yesterday.

The developers will offer another 64 apartments for sale this week, Mr Lui said.

Demand for luxury homes in Hong Kong remains strong even as the government tries to curb a 38 per cent surge in home prices since the beginning of last year amid concerns that housing is becoming unaffordable.

Luxury property prices may rise 20 per cent this year on a lack of supply and low interest rates, property broker Jones Lang LaSalle Inc said in a report last week.

‘The atmosphere is very hot,’ said Louis Chan, managing director of residential sales at Centaline Property Agency Ltd.

‘There’s a lot of momentum in both new and used home markets.’

Apartments at Larvotto, which have been selling for an average of HK$30 million, will be around 1,500 square feet to 2,500 square feet.

Larvotto is the name of the main public beach in Monaco.

Larvotto has a total 715 units. Hong Kong developers sell units in developments in batches instead of offering them all at once, to gauge demand and take advantage of rising prices.

There were 86 used-home transactions at 10 of Hong Kong’s biggest private housing complexes over the weekend, little-changed from a week earlier, Mr Chan said. — Bloomberg

Source: Business Times, 27 Jul 2010