AN UNUSUALLY strong field of 13 developers slugged it out in a close fight for a Pasir Ris residential site, in contrast to the recent tepid response to land tenders.

Still, the top bid – from a Hoi Hup Realty consortium – was not particularly high.

The bid came in at $141 million, which translates to $361 per sq ft per plot ratio (psf ppr).

The 99-year leasehold site is at the junction of Jalan Loyang Besar and the yet-to-be completed Pasir Ris Rise.

The top bid’s $361 psf ppr price is 10 per cent lower than an adjacent site at the junction of Jalan Loyang Besar and Pasir Ris Drive 4; this site sold for $403 psf ppr in May.

Market experts say worries about the global economy have led developers to be more selective about which sites to bid for – and to offer more cautious bids.

The last time a government land sale site attracted this much attention was in August, when 15 parties tendered for a residential site in Upper Serangoon Road. Tuan Sing Holdings clinched that particular site for $185 million.

Credo Real Estate’s head of research Ong Teck Hui said the high level of interest could indicate that developers felt there would be less competition for the Pasir Ris Rise site.

They might, therefore, have gone in with cautious bids, he said. The lowest nine submissions for this tender exercise ranged from $308 psf ppr to $205 psf ppr, reflecting this strategy.

The top bid was only 1.6 per cent more than the second highest offer of $139 million and 3.2 per cent higher than the third highest of $137 million.

The response may have been spurred by the continuing demand for mass market homes, said Colliers’ head of research and advisory Chia Siew Chuin.

Ms Chia said this sentiment could have been supported by the primary sales activity and price rises of private non-landed homes in suburban areas in recent months.

Another possibility, said Mr Li Hiaw Ho, CBRE Research’s executive director, is that developers feel residential land supply in Pasir Ris is more limited than other areas like Punggol and Sengkang.

In those areas, many land sites have been earmarked for development.

‘In addition, it shows that developers are confident of residential demand going forward, (demand from the upgrader segment) in particular,’ said Mr Li.

The site measures 185,938 sq ft and can be built up to a maximum gross floor area of 390,472 sq ft.

It is a 10-minute walk from Downtown East. Other amenities such as the White Sands shopping mall and Pasir Ris MRT station and bus interchange are a little further away.

However, Pasir Ris Park and the beach are close enough to walk to, a feature of the area on which Hoi Hup intends to capitalise, should it be awarded the tender.

A Hoi Hup spokesman said the new condominium development would be designed to ensure a sea view for as many of the units as possible.

The development will consist of six blocks, each up to 13 storeys high, yielding 400 apartments. This new project could be launched for sale in as little as nine months.

CBRE’s Mr Li noted that homes at nearby Seastrand are being marketed at an average of $930 psf, adding that more than 80 per cent of the condo’s 473 units have been sold as of the third quarter.

Units at another nearby project – NV Residences – were selling at an average price of $840 psf between July and September.

NV Residences, launched a year ago, consists of 642 units. Around 95 per cent of these homes have been sold to date, said Mr Li.

Industry observers say the $141 million bid for the Pasir Ris Rise site would translate to a breakeven cost of about $750 psf, with some analysts predicting the new condo development could launch at around $900 psf.

Source: Straits Times, 5th Oct 2011

Shenyang is the largest city in the north-east Chinese province of Liaoning.

The development, named the Shenyang Orchard Summer Palace, will cost 3 billion yuan (S$604 million) and take up more than 3.2 million sq ft.

It will feature a retail mall, a Grade A office tower, about 400 serviced apartments and about 450 private residential units.

Construction work on the project is currently under way and is expected to be completed by the end of 2015.

‘Over the years, we have established a close and strong working relationship with the Liaoning leadership,’ said WBL Corp chairman Ng Ser Miang.

‘Our businesses in Shenyang have grown with the city’s economic progress. The iconic Shenyang Orchard Summer Palace project is a mark of our continued commitment to invest in Shenyang.’

Mr Ng announced this commitment on the sidelines of the Singapore-Liaoning Economic and Trade Council meeting yesterday.

During the meeting, agreements were signed for seven collaborative projects between Singapore and Liaoning.

Among them were three agreements signed by Sembcorp Industries and various officials from Liaoning to expand its utilities business in the province.

Mapletree Logistics Trust signed a deal with the Hunnan district government to develop an integrated logistics park in the Hunnan New District in Shenyang.

The Singapore Tourism Board and the Liaoning Provincial Education Department inked a deal to cooperate on study trips, internships and enrichment programmes for students.

Government officials from Singapore and Liaoning also discussed business opportunities available along the province’s coastal economic belt and the Shenyang Economic Region.

The council agreed to strengthen bilateral collaborations in sectors such as environmental services over the next year.

Liaoning is known as a base for traditional heavy industries, with rich mineral resources.

In the first seven months of this year, bilateral trade between Singapore and Liaoning stood at US$1.4 billion (S$1.8 billion).

At the end of last year, Singapore’s cumulative foreign direct investment in the province was recorded at US$2.66 billion, with a total of 838 projects.

Singapore was Liaoning’s seventh-largest investor last year.

An artist’s impression of the Shenyang Orchard Summer Palace, which will feature a retail mall, an office tower, serviced apartments and homes. It is expected to be completed by the end of 2015. — PHOTO: WEARNES

Source: Straits Times, 29th Sept 2011

A FREEHOLD industrial property to be built in Mandai by joint venture Lian Beng-Centurion will be released for sale in the fourth quarter.

The 10-storey building will sit on a freehold plot of around 18,700 sq m that the joint venture bought in January.

Part of the Mandai Estate site in Woodlands Road will be used for the ramp-up building, with the rest earmarked for a workers’ dormitory housing about 4,700 beds.

The industrial building will have a canteen and 141 units that will sell for between $650 and $700 per sq ft each.

Unit sizes range from 100 sq m to 160 sq m.

Construction on the building is expected to begin in the fourth quarter and be completed within 18 months.

The joint venture, a tie-up between dormitory operator Centurion Corp and homegrown builder Lian Beng Group, said in a statement yesterday that the building has a B2 classification.

This means it is suited for heavy, clean and light industries. It will allow direct vehicle access for loading and unloading.

Lian Beng said the dormitory, which would include a basketball court and convenience store among other amenities, has received provisional permission from the Urban Redevelopment Authority to house workers from various industries.

It is not confirmed if the dormitory operator will be the joint-venture company or Centurion Corp.

Construction, which will begin after Singapore Land Authority approval, is expected to take up to 15 months.

‘The operation of the workers’ dormitory will provide us with long-term recurring income,’ said Lian Beng executive chairman Ong Pang Aik.

Centurion Corp chief executive Kong Chee Min added that the firm may expand a dormitory it owns at Toh Guan Road East earlier than scheduled due to high demand.

The firm said in a statement yesterday that it was also ‘actively pursuing opportunities in China to acquire or build dormitory projects’.

Centurion Corp was formerly SM Summit Holdings, a storage disc maker.

It was renamed Centurion Corp after a $95 million reverse takeover by private investment group Centurion, owned by former UOB Kay Hian stockbrokers David Loh and Han Seng Juan.

Mr Loh and Mr Han, who are first cousins, were known in the brokerage industry as the ‘A-team’ for their stockbroking success and for helping Chinese firms to list here.

Lian Beng shares fell one cent yesterday to close at 36 cents.

Source: Straits Times, 29th Sept 2011

THE largest property developer here has unveiled an innovative solar project that will soon power 45 residential blocks in Punggol with the sun’s energy.

The Housing Board yesterday inked a ‘solar-leasing’ agreement with local solar manufacturer Sunseap Enterprises, which will design, install and maintain the $11 million system.

The 2MWp (megawatt peak) solar photovoltaic set-up converts sunlight into electricity, which will then power common-area facilities such as corridor lights and lifts in the 45 blocks. A watt peak is a measure of power output used in relation to photovoltaic solar energy devices.

It will be the biggest solar installation here to date, and the first solar-leasing project.

The Pasir Ris-Punggol Town Council will take out a 20-year lease on the system from Sunseap Leasing, a unit of Sunseap Enterprises.

The town council will thus be spared the cost of the panels and their installation, but instead of buying power from the national grid, it will do so from Sunseap Leasing. The electricity will be priced at the current tariffs, with a 1 per cent discount thrown in.

HDB chief executive Cheong Koon Hean yesterday described the solar-leasing model as a ‘win-win’ one.

If the arrangement takes off, it could pave the way for more solar projects across the island, marking a turning point in Singapore’s growing solar industry.

As this is a test-bed project, HDB will cover 30 per cent of the cost, or $3.28 million; Sunseap will foot the rest.

Sunseap Leasing director Frank Phuan said the company has obtained financing from overseas banks to cover the cost, and will make its money by selling electricity to the town council over the next 20 years.

Up till now, the HDB has bought and installed its own solar panels – for 40 blocks in 10 towns.

With the solar-leasing model, it taps private enterprise to grow the solar programme, said Dr Cheong. She added that the HDB could look into doing the same for another 70 blocks, although their locations have yet to be identified.

‘We are going to learn about solar power generation through this test bed – what works, what doesn’t work… The solar-leasing model enables us to ramp up more quickly the introduction of solar power into HDB towns,’ she said.

Punggol, as Singapore’s first eco-town, is the ideal location for the HDB to start, she added. The agreement comes under the HDB’s $31 million, five-year scheme to test-bed solar energy at 30 of its precincts.

Three companies had bid for the contract, and Sunseap won due to its price and technical abilities, said the HDB.

The 11-year-old Sunseap has 35 staff and a factory in Boon Lay where it manufactures its solar panels. Most of its output is exported to Germany, which has a thriving solar industry.

Dr Thomas Reindl, a director at the Solar Energy Research Institute of Singapore, said solar leasing, though popular in countries such as the United States, is new in Asia.

The benefits of this system are that building owners can buy green power without having to pay upfront costs; and they also do not have to pay more than the prevailing electricity tariffs.

‘However, this concept works out for the leasing company only when electricity prices are not subsidised, such as in Singapore,’ he added. In countries where electricity costs are subsidised, it will not work because the leasing company will incur losses.

HDB’s Dr Cheong said she hoped the test-bed project will contribute to Singapore’s search for solar power generation technologies and develop the regional solar industry.

The installation of the solar panels will be completed by the middle of next year.

Up till now, the HDB has bought and installed its own solar panels. In the new deal, Sunseap will install them, and the town council will buy power from the company.
– ST PHOTO: ALPHONSUS CHERN

Source: Straits Times, 16th Sept 2011

IT’S not just shares that have fallen from favour over the past month. Sentiment in the residential property market has also cooled noticeably.

One sign came just last week when the top offer for a residential site at Upper Serangoon Road went at well below the winning bid for a nearby plot sold only three months earlier.

Still, while analysts expect private residential prices to drift slightly lower, nobody is anticipating the stomach-churning wild swings that have become the new normal in the stock market.

Developers are fairly sanguine too.

Mr Kwek Leng Beng, the boss of property giant City Developments, was quoted last month as saying that he believed ‘the (property) market will not crash unless, of course, the worldwide scenario is so bad’.

But this has not been the case so far. Mr Kwek noted that the debt crises in the United States and Europe would not have much of an impact here unless interest rates go through the roof. But at the moment, the market is full of liquidity and there is a lack of alternative investments.

But he added that sentiment plays an important role too.

‘That is human nature. Just like property, the higher property prices go up, the more you want to buy, I guarantee you. The lower it goes, the more scared you are,’ he said.

So it is not surprising to find analysts still willing to stick out their necks to make ‘buy’ calls on property counters, despite the stock market gloom.

For example, CLSA analysts Pang Chin Hong and Wong Yew Kiang noted in a report last Monday that property stocks ‘have priced in a significant downside after the recent market sell-down’.

‘Value has emerged with property prices trading at 40-60 per cent discount to revalued net asset value.

‘This has defied the sound fundamentals of developers which have strong balance sheets, earnings visibility from high unbilled sales and low inventory levels,’ they added.

They were convinced that while developers might be less aggressive in their land bidding going forward, sites near MRT stations or those with commercial potential would continue to attract a large number of offers.

Despite the bullishness of developers and analysts, there is no denying that any share market plunge would cast a pall over the property market.

This has prompted some market strategists to go through past data to try to determine the likely flash-points before they occur.

In a report last week, UBS strategist Tan Min Lan examined the Straits Times Index’s trading patterns during the four recessions over the past 15 years.

Based on past trends, she believed that once the STI’s decline from its peak hits 20 per cent, the private property price index could start to show a decline as well.

Ms Tan said: ‘This happened in 1998 and again in 2009. If this repeats itself, we expect the URA property index to start falling if the STI were to slip to 2,500 and below.’

If STI falls to 2,500, the market is flagging a recession, while in the unlikely event that it falls to 2,000, the market is anticipating a financial crisis, she added.

Last Friday, the STI closed at 2,846, or 13 per cent above the 2,500 support.

In any case, property consultants are hopeful that the Government will cushion a sudden softening in property prices by removing some of the anti-speculation curbs imposed in January this year to cool the market.

These included hiking the seller’s stamp duty to as high as 16 per cent and making it payable for up to four years from the date of purchase of a property.

The heavy sell-off in the stock market has also made property stocks more attractive than, say, investing in a condo.

Given the steep plunge in stock prices, some are hopeful that other real estate bosses will follow in the footsteps of sugar king Robert Kuok, who took Allgreen Properties private by buying out the remaining minority shareholders.

They were also heartened by the determination of some developers to defend their badly hammered shares from further bear raids by launching share buybacks.

Take property giant CapitaLand.

Although its management told analysts last month that share buybacks were unlikely, the company ventured into the market on Tuesday to snap up 1.5 million of its own shares in deals worth $3.65 million. It was the firm’s first buyback.

The move propelled its share price up 10.2 per cent over the next two days, raising its market value by $1.1 billion.

It has not escaped the attention of investors that some cash-rich developers are using the depressed stock market conditions to expand their business.

One example is UOL Group which is described by UBS as a developer that has the financial strength to ‘acquire opportunistically’ because 80 per cent of its residential properties have already been pre-sold.

‘Over the medium term, UOL could obtain statutory control of United Industrial Corporation (UIC) in which it and related parties have a 47.6 per cent stake.

‘Crossing the 50 per cent barrier would make UOL the second-largest developer in Singapore by assets,’ UBS said.

This is reflected by the purchases of UIC shares by UOL on the open market, it added.

It is clear from these corporate actions that even while the fear of financial Armageddon is keeping most investors sidelined, savvy developers are sniffing opportunities and making hay while it lasts.

Source: Straits Times, 12th Sept 2011

ECONOMIC uncertainty is likely behind the poor response to a residential site in Upper Serangoon Road that ended up going for a song.

Allgreen Properties emerged tops in a three-cornered tussle for the 265,012 sq ft site with a bid of $270 million or $291 per sq ft per plot ratio (psf ppr).

That looks like a giveaway given that just three months ago, a 99-year leasehold plot next door at the junction of Buangkok and Sengkang East Drives went for $391 psf ppr.

It is the first time in a long while that Allgreen Properties has topped a tender exercise, said analysts, who added that the developer has been cautious with bids in recent months.

Property experts said the Allgreen bid, if successful, would be the lowest price for a non-landed site since City Developments paid $280 psf ppr for a Chestnut Avenue site in August 2009 that was developed into the Tree House condominium.

Allgreen was followed by a consortium of Frasers Centrepoint, Far East Organization and Sekisui House with an offer of $253 million, or $273 psf ppr for the 99-year leasehold. A unit of Chip Eng Seng bid $261 psf ppr.

Experts cited a number of reasons for the lacklustre bidding.

Mr Ong Teck Hui, head of research and consultancy at Credo Real Estate, said the low offers were a clear sign that residential land sales are softening amid a more uncertain economic climate.

He added: ‘The bids are getting more cautious with more buffer being provided in anticipation of a more difficult market.’

Mr Nicholas Mak, head of research and consultancy at SLP International, noted that the low number of bids could be a sign that developers did not see the site as that attractive.

‘(The developers) could be saving their resources for other site tenders which would be launched soon,’ said Mr Mak.

But he cautioned that the lower land prices might not translate to lower home prices.

‘Allgreen Properties would likely sell the condominium to be developed on this site at the going market price at the time of its launch,’ he added.

The nearest MRT station – Hougang – is some distance away. However, the site’s proximity to Punggol Park and Serangoon Reservoir will appeal to nature lovers and exercise enthusiasts.

The land can be built up to a maximum gross floor area of 927,545 sq ft, possibly yielding 860 apartments.

Units at neighbouring Boathouse Residences have been transacted at an average of $880 psf.

Analysts predicted an approximate break-even price of between $630 and $660 psf.

Source: Straits Times, 8th Sept 2011

Eight contenders – including heavyweights like Frasers Centrepoint and Hong Leong – vied for the 99-year leasehold plot at Punggol Field Walk.

A $170 million bid jointly submitted by Capital Development and ZACD Investments topped the list. ZACD’s shareholders include Ms Sim Kain Kain and Mr Yeo Choon Guan, former directors of property consultancy SLP International.

The bid works out to $323 per sq ft per plot ratio (psf ppr) – about 20 per cent lower than the top bid of $363 million, or $406 psf ppr, for a similar plot at Punggol Central and Punggol Walk bought by the Sim Lian Group last December.

Mr Ong Teck Hui, head of research and consultancy at Credo Real Estate, said a crowded property market in Punggol could also be to blame. ‘(There are) some 2,600 units coming on from several new projects. These include Boathouse Residences, A Treasure Trove, The Luxurie… Some are near MRT stations and will provide stiff competition for buyers.’

Analysts said the cautious sentiment was expected given the turmoil in global markets. But they were surprised at the number of developers fighting for what they deemed a ‘mediocre suburban site’.

Many said this could signify developers are still upbeat about the prospects of mass market homes despite recent policy changes that now make public housing a more affordable option for more buyers.

The site has a plot ratio of 3.4 and can be built up to maximum floor area of 524,952 sq ft. An estimated 550 units can be built on this plot of land.

Punggol Plaza retail outlets are nearby but a new mall and other amenities are being built at Punggol Central, two LRT stations away, said Mr Li Hiaw Ho, executive director at CB Richard Ellis.

Homes at nearby executive condo project RiverParc Residence are selling at a median price of $694 psf, leading analysts to speculate that units at this condo will likely be priced above $800 psf.

The winning submission will be announced at a later date.

Source: Straits Times, 2nd Sept 2011

It is no longer enough for condominiums to boast a pool, gym, clubhouse and tennis court. Developers are adding fancy facilities such as a spa, sports bar, rock-climbing wall, luxury dining room and even a bird-watching tower to make their projects stand out.

Take the 417-unit Soleil@Sinaran condo at Novena, which was recently given its temporary occupation permit.

It has its own spa on the premises, run by well-known local chain Aramsa Spa. Soleil is believed to be the first in Singapore to tie up with a spa operator to run the facility in a condo.

Adding to the wow factor is that the swanky spa consists of three wooden- decked pavilions that each has two massage beds, a hot tub and a shower area, located in full view of the pool.

They are a striking sight amid the condo’s lush greenery and although they are out in the open, curtains can be drawn for privacy.

The spa pavilions are not the only fabulous feature Soleil residents can enjoy on top of the usual pool, gym, tennis court and barbecue pits.

The condo has two sports bars on its 20th floors, for residents only, where they can watch football matches while enjoying a beer. Developer Frasers Centrepoint Homes is finding an operator to run them.

The condo ‘high’ life craze includes Meadows@Peirce in Upper Thomson Road, which has a three-storey bird-watching tower where residents can spot birds nestling in the greenery at nearby Peirce Reservoir.

At Tree House condo in Dairy Farm Road, developer City Developments is building three tree houses on its premises, which ‘offer a different experience of play for the young and young at heart’, says Mr Anthony Chia, its director and head of projects.

One Devonshire condo in Killiney Road, meanwhile, scales new heights with a three-storey rock-climbing wall.

Fancy something not so ‘out there’? At Palm Gardens condo in Choa Chu Kang, there is a bowling alley at the clubhouse, while upmarket Nassim Park Residences has a luxurious dining room.

Over at The Orchard Residences, residents can rent wine lockers to store their wines.

The chief executive of real estate firm ECG Property, Mr Eric Cheng, says of the trend: ‘Telling potential buyers their units can have a pool view no longer cuts it, as condos now all have pools.’

Indeed, Soleil’s additional facilities were what attracted Korean-Australian expatriate Verena Lim, 29, to buy a two-bedroom unit there.

‘The spa and the sports bar caught my attention as they have not been seen before in condos here,’ says Ms Lim, a vice-president at an Australian investment company.

Frasers Centrepoint Homes worked with Aramsa Spa to design the pavilions, and the developer’s assistant general manager of sales and marketing, Mr Elson Poo, notes: ‘In line with the strong interest in spas, we have incorporated spa facilities so residents will be able to enjoy the convenience of a spa experience right on their doorstep.’

Indeed, Ms Lim, who usually goes for spa treatments in Orchard Road once a month, says she will switch to the spa at her home, because ‘there’s no reason not to use the one downstairs’.

Like other owners, she has just received her keys and is in the midst of moving in, and adds that she will be making a booking soon.

Residents need to make appointments for their treatments such as massages and facials two weeks ahead. The cost is the same as at Aramsa Spa’s outlet in Bishan Park. A 60-minute massage, for example, costs $108.

However, spa manager Kelvin Tay says that although there are no additional charges, residents have to purchase a minimum of $200 worth of treatments a session for transportation charges to be waived.

Mr Tay adds that other developers have also approached the spa to set up shop at their condos, but declined to elaborate.

As for other unusual condo facilities such as Palm Gardens’ two-lane bowling alley, a spokesman for developer Keppel Land says: ‘Such innovative and lifestyle features make for stronger value offerings in our homes.’

According to retiree Danny Nai, chairman of the condo’s management corporation strata title (MCST) committee, the bowling alley is very popular with residents, who pay $5 an hour for its use. Bowling shoes and balls are provided. ‘We have bookings every night and the alley is packed on weekends.’

Over at One Devonshire, the idea for its rock-climbing wall on one of its sky terraces was proposed by the project’s landscape developer, Belt Collins.

Ms Anna Tabo-Nair, a project manager at Belt Collins, says it offers residents a different experience. The condo already has a pool, barbecue pits, clubhouse, gym, tennis and squash courts and several gardens. ‘But for residents who want something different, they can go to the rock-climbing wall,’ says Ms Tabo-Nair.

The idea went down well with the condo’s developer, Allgreen Properties.

Ms Tabo-Nair says the hand grips needed to climb the rock wall go up to 3m high, ‘so it is still very safe, and there will not be any supervision needed’.

She believes it will be a hit with residents when the condo is completed next year.

As for the dining room at Nassim Park Residences – a project by United Overseas Land (UOL) Group and which was completed earlier this year – it has a pool view, can seat 14 people and comes with a plush lounge. It also comes with a fully equipped kitchen, so residents can hire their own private chefs to do the cooking.

UOL Group’s deputy general manager for marketing, Mr Anthony Wong, says: ‘We have in mind the lifestyle of these home-buyers; we envisage frequent socialising and dinner parties. Therefore, we provided a well-furnished dining room, lounge and kitchen where owners can invite their friends over and have a chef whip up a good meal without having to clean up their own place afterwards.’

A resident who declined to be named says the dining room ‘is decorated like a hotel private lounge’. The room is done up in dark wooden panels and has a sofa and thick carpets.

UOL Group also developed Meadows@Peirce, which, along with the talking-point bird-watching tower, also has a sky-gazing jacuzzi near the pool.

Mr Wong says enthusiastically: ‘The design fuses outdoor and indoor spaces to create a sanctuary of peace and tranquillity. We created the bird-watching tower and the sky-gazing jacuzzi facilities in line with its nature-based theme.’

But added facilities come with an additional price – a higher monthly maintenance fee.

‘There would be more facilities to maintain, so naturally the maintenance fees would be higher,’ says Mr Francis Zhan, chief executive of Association of Management Corporations in Singapore, which represents more than 3,000 MCST committees of condos here.

He adds that the extra facilities are usually in upmarket condos, where monthly maintenance fees can range from $800 to $1,600.

In comparison, the ‘mass market condos usually charge about $300 to $400 monthly in maintenance fees’.

Ms Eleana Teo, executive director at Knight Frank Estate Management says, ‘For estates with more varied facilities and an in-house team of concierge and/or guards, residents would have to pay around 10 to 30 per cent more in terms of maintenance charges to finance such expenses.’

ECG’s Mr Cheng says that ‘with so many condo launches, projects must have their selling point, hence these facilities’.

Added facilities will ‘attract’ buyers, he says, ‘even if they may not use the facility, they still want to have it.’

Even if the condo is not in an ideal location, its facilities will pull in buyers, as ‘buyers are attracted to the condo’s offerings. Plus it is easy to get around Singapore these days’.

One home-buyer, however, is not convinced by these condo ‘carrots’. Housewife Mary Lee says: ‘Location and the design of the apartments are more important. The facilities are good to have, but apart from the pool, I may not use the others and don’t see the point of paying to maintain them.’

Source: Straits Times, 27th Aug 2011

DESPITE stock market and economic uncertainty, prices of well-located suburban homes near MRT stations might still inch up 1 per cent to 3 per cent in the second half of the year, says City Developments (CDL) executive chairman Kwek Leng Beng.

Developers are likely to keep prices stable as demand for such homes is still healthy, he said at the firm’s second- quarter results briefing at M Hotel yesterday.

CDL reported a 17 per cent surge in net profit to $221 million for the three months ended June 30.

Mr Kwek offered a different outlook for homes in less prime locations. Some developers may bring prices down by up to 5 per cent as they price apartments competitively to sell; however, a collapse in prices is unlikely, he added.

He also said that the Government will probably not introduce more cooling measures for the market.

‘I don’t believe (the Government) will come out with new measures to destabilise the market, especially after S&P re-rated the US credit rating; the world is suddenly more uncertain now,’ he added.

The Government is more concerned about the public housing sector where it has already made various policy changes, Mr Kwek noted.

CDL said that it expects to launch another 500 units this year in four projects, including an executive condo in Choa Chu Kang and upmarket project Nouvel 18 in Anderson Road.

CDL also said that while the Government had cautioned of a possibility of an oversupply, subsequent reports may have led to this fear being ‘overblown’.

‘With a low interest rate environment, developers here will be mindful of market appetite which will be a major factor in deciding the timing of their launches and purchase or tender for development sites,’ it added.

Low interest rates, uncertainty and volatility in the equity market and the lack of other suitable investment opportunities also continue to prop up demand, limiting the fall in property prices even in the case of some oversupply.

However, CDL expects a slowdown in the overall residential market with lower sales volume and moderated prices on the back of more cautious sentiment.

High-end homes prices are also still 8 per cent to 10 per cent under their 2008 peak and so are likely to hold steady, Mr Kwek noted.

On the commercial front, Mr Kwek remains confident that the office sector will stay steady and healthy.

Although global economic uncertainties might result in some firms delaying expansion plans for now, they might resume these moves next year instead.

Rents are likely to go up steadily rather than escalate, he added.

For the half year, net profit jumped 45 per cent to $503 million, driven by its property development arm.

Revenue for the second quarter dipped 0.2 per cent to $979 million while it rose 4 per cent to $1.75 billion for the half year.

CDL’s shares were up 24 cents to $10.14 yesterday.

Source: Straits Times, 13th Aug 2011

BIDS by developers for suburban plots may be coming down somewhat but that does not mean that home prices at launches are certain to fall too, top executives of various property firms said yesterday.

Rising development costs – such as an expected jump in labour and construction costs – are challenges that developers are grappling with, they warned.

These cost factors might offset lower land prices, the developers added on the sidelines of a Real Estate Developers’ Association of Singapore (Redas) seminar held at Orchard Hotel yesterday.

Frasers Centrepoint group chief executive Lim Ee Seng said developers do not look at land price alone when pricing their launches. Market expectations are the most important factor.

‘If the market prices it at a certain level and you sell it way above, you cannot sell. But if you can sell it at a certain level, why would you deliberately want to underprice it?’ he added.

But the lower break-even cost brought about by lower land prices gives developers the advantage of more flexibility and a buffer in case the market turns, he added.

However, Mr Lim emphasised that the fall in tender prices has not been significant yet.

Construction costs are expected to rise with strong building demand from the Housing Board, which plans to launch 25,000 new flats this year, more infrastructure works and similarly robust demand from the private sector.

Developers said that, coupled with the reduction in the number of foreign workers and higher material costs, overall costs are expected to spike further.

On the residential property market as a whole, however, Mr Wong Heang Fine, president of Redas and chief executive of CapitaLand Residential Singapore, expects a period of stability without the runaway prices seen in the past couple of years.

Still, while it is too early to call for a reversal of the various cooling measures introduced by the Government, it is clear that they have worked to remove the speculative froth from the market and stem the sharp rise in prices, he said.

‘All the cooling measures that are in place presently; the position that we take is to let the dust settle (and to) let nature take its course… Singaporeans who own private properties make up less than 15 per cent of the total residential market in Singapore.

‘Given this, the private residential market should be given the opportunity to independently adjust to achieve its demand and supply equilibrium.’

Home hunters are taking longer to decide on a purchase, which shows that sentiment has been affected. However, basic demand is still present. In fact, if healthy economic growth, low interest rates and ample funds are present, they will continue to fuel purchases, he noted.

City Developments group general manager Chia Ngiang Hong said that despite concerns of an impending oversupply, the government is able to tweak the six-monthly land sales programme according to market conditions.

‘We are hopeful that along the way, if the market situation does change, the government will take that into consideration and proportion the sites between the confirmed and reserve list,’ he added.

Confirmed list sites go on sale regardless of interest and are often an indication of the Government’s strategic development plans. Land on the reserve list is put up for tender only if developers make an acceptable initial offer.

Source: Straits Times, 29th July 2011