New govt measures won’t affect genuine buyers: Lim Hwee Hua

THE latest slew of government measures to temper the property market is ultimately meant to build up a ‘sustainable’ market and will not affect genuine buyers, said the Minister in the Prime Minister’s Office and Second Minister for Finance and Transport, Lim Hwee Hua.

‘What will be sustainable is property purchases or price increases that is justified by the amount of wealth that a person has,’ said Mrs Lim at a post-National Day Rally dialogue for women grassroots leaders. ‘What is not sustainable is when people borrow from banks to speculate. What we want to do is to take out this speculative activity. The main thing is to make sure banks don’t lend unnecessarily, that people don’t get easy access to money. Genuine buyers will not be affected by this.’

But the measures don’t mean that foreign investors should be barred from the property market either, she said in response to a question about the effect on property prices from these buyers.

‘Closing the doors on foreigners doesn’t necessarily mean we will have a better market. Because that would mean we would be buying among ourselves and the market could stay very down if it’s only all local owners,’ she said at the People’s Association auditorium last night.

Mrs Lim was among those fielding questions and comments about the issues raised in Prime Minister Lee Hsien Loong’s National Day Rally speech.

Under the new property rules, buyers of public homes will enjoy an increased supply of HDB flats and see the adjustment of the income cap to address the problems of the ‘sandwich group’ of home buyers.

The intention is that flats will remain affordable for this segment of society and to broaden their choices as the ‘sandwich group’ can choose either to buy executive condominiums or Design, Build, Sell Scheme flats, said Mrs Lim.

One concern of the grassroots leaders present was the issue of fostering a stronger sense of national pride. Some also said that while remembering Singapore’s old guard such as Dr Goh Keng Swee, more should be done to honour them while they are around to help youths of today connect better with Singapore’s roots.

Others raised the question of why there was little pride taken in Singapore’s achievements, evidenced by the volume of griping by Singaporeans.

To that, Mrs Lim said it may be a natural Singaporean trait tied to ‘our survival instincts’.

‘We always say we have nothing so we have to do everything very well, therefore, we should never say that anything is good enough. In the process, we may come across as being expectant. But as long as it doesn’t make you unhappy in the process, it’s a good drive to have to spur us on.’

Source: Business Times, 1 Sep 2010

ANOTHER five private housing sites – which could yield a total of 2,045 private homes – were released for sale by the State yesterday.

One of the land parcels, at Petir Road, was launched for sale under the Government’s Confirmed List. The four other sites – one each at Alexandra Road, Tanah Merah Kechil Road, the junction of West Coast Link and West Coast Crescent, and the junction of Pasir Ris Drive 3 and Elias Road – are available for application for sale under the Reserve List of the Government Land Sales (GLS) programme for the second half of 2010.

Under the Reserve List system, an interested developer can submit an application for a site with a minimum offer price.

If the price is deemed acceptable, the State will then put up the site for sale by tender.

The land parcels are ‘well distributed in various locations across the island to provide developers and home-buyers with more choices’, said government agencies Urban Redevelopment Authority (URA) and Housing & Development Board (HDB), which are handling the site sales.

The Petir Road plot has a site area of about 2.3 ha, and a maximum permissible gross floor area of about 514,000 sq ft. Around 430 units can potentially be built on it.

Based on an eventual average selling price of $800 per square foot (psf), the bids could be in the range of $350-$400 psf per plot ratio, said DTZ’s head of South-east Asia research Chua Chor Hoon.

But it is likely that developers will not be too bullish about the future selling price and so could bid lower.

She added: ‘Arising from the property market measures, developers will be more selective (about) the sites, so we are likely to see fewer bidders for each site, and they will be less aggressive in their bids.’

The tender for the site will close at noon on Oct 7.

The government has made available sites that can yield about 13,900 private housing units – of which about 8,100 units will be from sites on the Confirmed List – in its GLS programme for the second half of the year.

This marks the highest potential supply in the history of the twice-yearly GLS programme.

And on Monday, the Ministry of National Development (MND) announced new measures to cool the private and public housing markets. It added that it will inject an even larger supply of private housing in the first half 2011 GLS programme if demand continues to be strong.

MND also announced demand side measures to cool the private housing market.

Among other changes, those who hold an existing mortgage can now only borrow up to 70 per cent of a property’s value for the second home, down from 80 per cent previously. They must also pay 10 per cent in cash, up from 5 per cent.

Source: Business Times, 1 Sep 2010

Offer includes 1,408 Build-to-Order flats in Yishun Riverwalk

THE Housing and Development Board (HDB) is offering 3,032 flats for sale – the largest supply of flats in a single launch this year – under its Build-to-Order (BTO) and Sale of Balance Flats (SBF) exercise.

This brings the total number of flats launched by HDB since the start of this year to 12,876.

The latest launch comprises 1,408 new flats in Yishun Riverwalk under the BTO system and 1,624 flats under the SBF exercise spread across 10 non-mature towns or estates in Bukit Batok, Bukit Panjang, Choa Chu Kang, Hougang, Jurong East/ West, Punggol, Sembawang, Sengkang and Woodlands.

Selling prices of the flats at Yishun Riverwalk range from $63,000-$87,000 for a studio apartment to $287,000-$350,000 for a 5-room flat, while the selling prices of flats under SBF exercise range from $104,000-$126,000 for a 2-room flat to $354,000- $482,000 for an executive flat.

HDB said that all flats offered in this launch enjoy a generous subsidy below their market value. It advised flat buyers to ‘exercise financial prudence and buy a flat that they can afford’ and that those looking for affordable options can consider the BTO flats at Yishun Riverwalk.

For flats purchased in Yishun Riverwalk, first-time flat buyers are estimated to use 21-24 per cent of their monthly household income to meet their monthly loan payments.

PropNex CEO Mohamed Ismail noted that the median price of the flats offered at Yishun Riverwalk are ‘extremely attractive’. Based on HDB’s second quarter figures, 3-room flats at Yishun Riverwalk are priced about 39 per cent lower than similar flats in the estate, while 4- and 5-room flats are about 21 to 23 per cent cheaper.

The provision of lifestyle amenities at Yishun Riverwalk and its proximity to public transport makes the BTO flats all the more attractive for first-time buyers, he said.

‘Despite the measures announced by HDB yesterday to curtail speculative flipping, the demand for these flats will still be high as the buyers’ profile is such that the new measures would have little effect on them,’ Mr Ismail added.

As demand for public housing remains high, Mr Ismail said he expects the oversubscription rate for the BTO to be around five to six times. He expects the flats under SBF exercise to be at least eight times oversubscribed, especially for flats that are already completed, have a shorter waiting period or are in more matured estates.

HDB had said that it will increase the total new flat supply to more than 16,000 new flats this year. The next launch will consist of 1,320 flats in Woodlands this month.

The BTO supply will also be supplemented by the upcoming 3,824 units under the Design, Build & Sell Scheme (DBSS) and Executive Condominium Scheme to provide choices for higher-income households, HDB said.

It added that it is prepared to launch more sites for DBSS development if there is sustained demand.

Source: Business Times, 1 Sep 2010

It draws 13 bids, with top offer $813 psf ppr possibly a record for hotel land

A HOTEL site at the junction of Clemenceau Avenue and Havelock Road has proved to be a top draw. It attracted 13 bids and a top offer of $101.1 million or $813 per square foot per plot ratio (psf ppr) – almost double what analysts had tipped just two months ago.

The highest bid came from a group of companies including RB Capital, which is owned by Kishin Hiranandani, a nephew of Asok Kumar Hiranandani of the Royal Brothers Group.

When the 99-year leasehold site next to Central Mall was released for sale in June, property analysts said that it could fetch $378-500 psf ppr. They had expected just a handful of bidders.

Instead, the site drew plenty of offers – and from familiar names such as Far East Organization, Ong Beng Seng’s Hotel Properties Ltd (HPL), Fragrance Group and CapitaLand’s serviced residence unit Ascott.

Far East Organization put in the second-highest bid of $96 million or $772 psf ppr. RB Capital’s bid was just 5 per cent higher.

Asok Kumar Hiranandani and his son Bobby put in the third-highest bid of $85.8 million or $690 psf ppr – in what one market watcher termed as ‘friendly family competition’.

The top bid was about twice as much as the lowest bid, which was $50.1 million or $402 psf ppr from Hoi Hup Realty.

And the price tag of $813 psf ppr could be a new record for hotel land in Singapore, said Cushman & Wakefield managing director Donald Han.

Analysts attribute the strong interest in the tender to growing demand for hotel rooms, as the number of visitor arrivals to Singapore climbs.

‘In the hotel sector, the average occupancy rate gained 10.2 percentage points year on year to 90 per cent in July,’ said Li Hiaw Ho, executive director of CBRE Research. ‘Likewise, the average room rate grew 19.9 per cent year on year to $209 in July. In the light of the growing number of tourists and demand for hotel rooms, other sites presently on the reserve list should be triggered before the end of the year.’

The top bid of $813 psf ppr is much higher than the price paid for two nearby sites sold under the government’s land sales programme in 2006.

The site on which Park Hotel Clarke Quay stands was awarded for $466 psf ppr, while the plot for Studio M was transacted at $518 psf ppr.

The latest site has a maximum gross floor area of 124,400 square feet. An estimated 195 rooms can be developed on the plot.

Source: Business Times, 1 Sep 2010

Sentosa sees biggest jump in landed residential DC rates, to the tune of 36%

(SINGAPORE) As expected, the government has raised development charge (DC) rates for residential, commercial and industrial uses starting today on the back of Singapore’s broad-based property market recovery.

Hikes in the charges – which are based on current market values and payable for intensifying or enhancing the use of some sites – reflect the fact that all land deals in the past six months were sealed at prices above land values imputed from the previous March 1, 2010 DC rates, says Colliers International director Tay Huey Ying.

DC rates for landed as well as non-landed residential use have been raised by an average of 13 per cent. The average DC rate for commercial use increased one per cent; the biggest hike of 25 per cent was in Jurong Lake District, where Lend Lease bought a site at a hotly contested state tender in June for $650 per square foot per plot ratio.

DC rates – which are revised on March 1 and Sept 1 each year – are specified by use groups (such as landed and non-landed residential, commercial and hotel) across 118 geographical sectors in Singapore.

Industrial-use DC rates were increased by 10 per cent on average, led by sector 115 (Woodlands/Yishun area), where the rate has been hiked 16.3 per cent, on the back of evidence of bullish prices for industrial sites awarded at state tenders in April at some 123-139 per cent above the imputed land values based on March 1 DC rates for the location. DC rates for hotel/ hospital use, however, were left untouched.

The review was conducted by the Ministry of National Development in consultation with the Chief Valuer.

Sentosa saw the biggest hike in landed residential DC rates, to the tune of 36.4 per cent. Analysts were not surprised given the record bungalow prices fetched this year at Sentosa Cove.

Sentosa also posted one of the biggest increases in non-landed residential DC rates, at 22.7 per cent. The biggest hike of 28 per cent, however, was for sector 50 (which includes the Tanjong Rhu and Fort Road areas), as well as the Farrer Park/Balestier location (sectors 58/59).

The former Fort Terrace site was sold in March at a unit land price that was 137 per cent above the imputed land value based on the March 1 DC rate for the area. This was the highest premium reflected for any non-landed residential development site sold in the past six months, observes Ms Tay.

CBRE Research executive director Li Hiaw Ho notes that the rate increase for the Balestier area was supported by land prices for the Diamond Tower, Goodwill Mansion, Colourscan Building and Melrose Court deals.

Looking ahead, however, developers are expected to be more measured when bidding for development sites, given the property market cooling measures released this week, he added.

Jones Lang LaSalle’s SE Asia research head Chua Yang Liang also predicts ‘a more moderate collective sales market over the short term’, citing the latest hikes in non-landed residential DC rates as well as the cooling measures.

However, Credo Real Estate managing director Karamjit Singh says the DC rate increases per se will not have much impact on en bloc sales in general. He estimates that for every 10 en bloc cases in the market today, about five or six do not entail a DC payment, while three or four may have a small DC component vis-a-vis the total land value. Only one out of 10 cases will have a significant DC component of at least 5 per cent of total land value.

‘The en bloc cases that would see the most significant erosion in values would be those whose owners were attempting to sell them for their rezoning potential, e.g. from current industrial use to residential, or where their current built-up plot ratios are much lower than their potential plot ratios,’ he added.

Jones Lang LaSalle’s analysis showed that non-landed residential DC rates advanced in 116 of the 118 geographical sectors, remaining unchanged in just two areas. The smallest gain of 5.6 per cent was in the sector covering Philip Street, Pickering Street, South Bridge Road and Canal Road. Rates climbed 20 per cent for Pasir Ris/Loyang, 18.8 per cent for Harbourfont area and 16.7 per cent for Tampines/Bedok Reservoir area – supported by evidence of land sales, mostly through state tenders.

Landed residential rates also advanced in 116 sectors; the smallest rise of 6.9 per cent was in Ulu Pandan/Pine Grove area.

Industrial rates were upped in all 118 sectors, with the smallest gains at 8.3 per cent.

Jones Lang LaSalle’s analysis also showed that commercial-use rates climbed in only 11 sectors – all outside the central region. In the CBD, commercial DC rates were left unchanged, although non-landed residential rates went up by 12.5 to 16.7 per cent.

‘The gap between the two uses has widened further compared with the March 1 rates. This would have an impact on developers intending to redevelop old office blocks to residential use,’ notes DTZ’s SE Asia research head Chua Chor Hoon.

‘With the office market recovering and the residential market hit by the property measures, some developers may reconsider their plans and redevelop these properties into new offices or have a bigger office component in their proposed schemes,’ she added

Source: Business Times, 1 Sep 2010

THE Singapore Land Authority (SLA) has launched a tender comprising 33 black and white bungalows at Mount Pleasant for lease.

These colonial bungalows, which are being offered on a master tenancy basis, are approved for residential use.

The successful tenderer will get an initial tenancy period of three years, with an option to renew for two more three-year terms.

The bungalows have a gross floor area (GFA) ranging from about 210 sq m to 1,140 sq m, with a land area of about 1,500 sq m to 18,000 sq m.

The guide rent for master tenancy of the 33 bungalows is $488,300 per month.

Together, the properties have a total GFA of about 17,300 sq m.

Their combined land area of about 181,600 sq m works out to about 22 soccer fields.

The bungalows are a charming throwback to Singapore’s colonial past and rich in historical value.

Besides their architectural significance, the bungalows run along the tranquil and leafy Mount Pleasant Road, which has been designated by the National Parks Board as a Heritage road.

Only those who have a proven track record in financial management, and standing, experience and technical capability and expertise, may participate in the tender, which closes on Sept 21.

Source: Straits Times, 1 Sep 2010

MAJOR hotel players were among 13 bidders yesterday for a hotel site at the junction of Clemenceau Avenue and Havelock Road.

The highest offer of $101.11 million was lodged by RB Capital Hotels, which is controlled by a nephew of Royal Brothers Group’s Asok Kumar Hiranandani.

It pipped bids from established hoteliers such as The Ascott Holdings, Millennium & Copthorne Hotels and Fragrance Group.

The top tender price works out to about $813 per sq ft (psf) of gross floor area, according to a statement by the Urban Redevelopment Authority.

This is significantly more than the $40.9 million initial bid that triggered the tender for the site, and almost double what analysts had initially expected for the 99-year leasehold land.

Sited next to Central Mall and Merchant Square, the parcel is about 5,500 sq m and can be built up to seven storeys and 11,555 sq m in gross floor area.

Singapore’s booming tourism sector is the reason for the enthusiastic response to the site, property consultants said yesterday.

‘We expected quite a good number of bids, because the hospitality sector is definitely one of the hot areas that developers are looking at now,’ said DTZ’s head of South-east Asia research, Ms Chua Chor Hoon.

‘In fact, we see tourist arrivals hitting a new record high every month, room rates are going up and the integrated resorts are giving Singapore quite a buzz.’

Almost 1.1 million tourists visited Singapore in July, exceeding the one million mark for the first time and extending the streak of record visitor arrivals to its eighth month.

The first seven months saw about 6.7 million tourists and the Singapore Tourism Board is confident that its target of enticing 11.5 million to 12.5 million tourists to visit this year will be met.

In the hotel sector, the average occupancy rate hit 90 per cent in July, up from 80 per cent a year ago, said CBRE Research executive director Li Hiaw Ho.

Likewise, the average room rate increased to $209 in July, a rise of 19.9 per cent compared with the same month the previous year, he added.

‘In the light of the growing number of tourists and demand for hotel rooms, other sites on the reserve list should be triggered before the end of the year,’ he said.

Mr Li also noted that the site on offer yesterday fetched a much higher price than two nearby ones that were sold in 2006. The site on which Park Hotel Clarke Quay now stands was awarded for $466 psf of gross floor area, while the plot for Studio M transacted at $518 psf.

The Clemenceau Avenue site ‘is well-located with entertainment hubs like Boat Quay and Clarke Quay in close proximity’, Mr Li said.

‘In addition, the CBD, Orchard Road and the Marina Bay Sands are also short drives away. The area is growing into an established hotel location with nearby hotels like Studio M, Park Hotel Clarke Quay, Gallery Hotel, Novotel Clarke Quay and Park Regis Hotel.’

Source: Straits Times, 1 Sep 2010

Govt raises DC rates by 13% on average amid buoyant market

RECENT property market exuberance has prompted the Government to hike the fees that developers pay to enhance the use of residential sites.

The Ministry of National Development (MND) announced yesterday that from today, such fees – called development charges (DC) – for the landed and non-landed homes sectors will climb by an average of 13 per cent.

The charge is adjusted every six months and closely reflects changes to land and property values.

It is paid if a developer wants to intensify the use of a site, for instance by redeveloping an existing project into a larger one.

In the landed homes segment where prices have seen strong increases, the largest rise of 36.4 per cent was registered in Sentosa.

And, in the non-landed homes sector, the largest rise of 28 per cent is in the Tanjong Rhu area as well as the Farrer Park and Balestier areas.

Property experts said the impact of the MRT Circle Line – particularly in the Braddell, Bartley, Upper Aljunied and Woodleigh areas as well as the Bishan and Ang Mo Kio areas – had been factored into the DC rate hikes.

These two localities, said Jones Lang LaSalle, will see strong increases of approximately 20 per cent for landed homes, with non-landed homes seeing an increase of about 15.6 per cent.

Commercial sites in these two areas will see rises of 7.3 to 7.5 per cent, it said.

Colliers International’s director of research and advisory, Ms Tay Huey Ying, said the new DC rates were reflective of the market during the review period, given the pick-up in interest for development land amid Singapore’s strong economic recovery.

But, she added, the upward DC adjustments, combined with the recent market cooling measures, could dampen developer sentiment and depress land price threshold levels.

She said this could ‘further widen buyers and sellers’ price expectations in the collective sale market’.

The MND also announced yesterday that the DC for industrial land will climb 10 per cent on average. And, in the commercial sector, which has seen limited sales activity, the DC will rise on average by 0.8 per cent, with the largest rise of 25 per cent in Jurong Lake District.

CBRE Research noted this was the first time since March 2008 that average DC rates for the commercial segment had increased, reflecting the turnaround in the economy as well as buoyant land values.

There is no change in the DC rates for the hospitality sector.

The MND sets the rates every March and September in consultation with the Chief Valuer.

Source: Straits Times, 1 Sep 2010

PROPERTY developers are widely expected to delay their new launches, now that buying sentiment is likely to be hard hit by the slew of market-cooling measures.

The Government announced new rules on Monday that strongly discouraged speculation on homes, such as extending a seller’s stamp duty from one year to three years.

The measures also require home owners with outstanding mortgages to fork out at least 30 per cent of the purchase price upfront, rather than the 20 per cent that previously applied.

Some industry analysts said yesterday that the changes could dent sales, especially for new launches in the mass-market segment.

DMG and Partners property analyst Brandon Lee said the measures would ‘dampen buying sentiment across all residential segments and cause developers to delay their launches’.

However, he felt that prices were likely to stay firm, due to developers’ strong holding power in view of robust sales and low funding costs.

‘We believe speculative purchases will be curbed, particularly within the mass-mid segment, where small units of low price absolute quantum but higher prices per square foot continue to generate strong take-ups,’ he said.

Property developer City Developments (CDL), which was slated to launch two new projects – NV Residences in Pasir Ris and Copthorne Orchard in Bukit Timah – in the third quarter of the year, said yesterday that the launches will be timed ‘according to market conditions’.

Prior to the announcements, industry watchers had noted that developers were lining up projects for launch after the traditionally superstitious Hungry Ghost Festival ends next Tuesday.

Hoi Hup Sunway was said to be launching the 473-unit Vacanza@East – a freehold project in Lengkong Tujoh in the east, near the Pan-Island Expressway.

And Chip Eng Seng’s Oasis@Elias in Pasir Ris was slated for relaunch at higher prices, after those at the condo rose to about $740 per square foot recently, compared to an average of $670 per sq ft in July last year.

Now, industry watchers are unsure if the launches will go ahead. Many developers may hold off until the effects of the new rules are more certain.

A CDL spokesman told The Straits Times yesterday that ‘as the new measures have just been released, the market will take time to absorb the news’.

OCBC Bank head of treasury research and strategy Selena Ling said that the impact on market sentiment ‘may be significant’, given the array of measures in both the public and private markets.

Given that prices have now exceeded the historical peak set in 1996, she felt the measures were a ‘sobering reminder against further froth in the domestic property market’.

‘The risks are twofold as cited by the Government, namely potential capital losses should growth falter, and higher interest rates,’ she said.

CBRE Research executive director Li Hiaw Ho noted yesterday that the changes ensured that only people with strong cash positions would be able to enter the residential market for investment purpo-ses.

‘Going forward, we expect that developers will be less bullish in their bids for development sites and increases in home prices will be more moderated,’ he said.

Source: Straits Times, 1 Sep 2010

THE racial mix of Singapore citizens has stayed fairly constant over the last 10 years, despite the influx of new immigrants and the shift in the ethnic mix of permanent residents.

According to latest figures released by the Department of Statistics, the proportion of citizens who are Chinese dipped only slightly, from 76.9 per cent in 2000 to 76.2 per cent now.

Malays now form 15.1 per cent, compared with 14.9 per cent then.

The percentage of Indians increased slightly to 7.4 per cent, compared with 7.2 per cent 10 years ago. This is in spite of an influx of almost 68,000 new PRs of Indian ethnicity, raising their proportion among PRs to 20.4 per cent.

The racial mix figures bear out Prime Minister Lee Hsien Loong’s remarks during his National Day Rally speech on Sunday. He had said: ‘Let me assure Singaporeans, especially minority communities, that we will not allow immigration to upset the current mix of races among our population. The current mix is stable, and contributes to our racial and religious harmony.’

Source: Straits Times, 1 Sep 2010