$480m to $500m expected for prime site near Orchard Road

THE Cavenagh Gardens condominium near Orchard Road is up for collective sale with an expected price of between $480 million and $500 million.

Owners stand to reap between $2.5 million and $3 million each for their units – 35 to 45 per cent more than if they sold their homes individually, said marketing agent PropNex yesterday.

The expected price is between $1,620 per sq ft per plot ratio and $1,688 psf ppr for the 130,000 sq ft site. This includes the additional 10 per cent balcony allocation.

If adjoining parcels of state land are included, the freehold site in Cavenagh Road could increase to 150,000 sq ft and bring the price down to $1,413 psf ppr to $1,471 psf ppr.

Cavenagh Gardens consists of 172 homes spread across two 13-storey towers and a five-storey block. The estate in Cavenagh Road could be redeveloped into 350 units of 1,000 sq ft each.

This is at least the third time the development has been up for collective sale. Owners wanted $619 million in October 2007 but dropped that to around $450 million in June 2008 amid the global financial crisis.

PropNex added that developers can apply to retain the towers and develop them with additions and alterations.

While the estate is in a prime area, a successful deal might be hard to pull off as collective sales of more than $500 million, including those of Pine Grove, Pearl Bank Apartments, Tulip Garden and Hawaii Tower, have failed to find buyers.

Developers have shunned large projects in favour of less risky investments of less than $100 million. A big supply of state land released has also siphoned capital away from the en bloc market, say experts.

‘With the influx of foreign investors and the interest of high-end home buyers, this land site has (many) opportunities,’ said Mr Charles Chua, head of PropNex investment sales department.

‘(It can) be developed into high-end residences, serviced apartments or small office, home office apartments.’

He added that the project’s price of about $1,620 psf ppr is ‘reasonably attractive’. By comparison, the collective sale of nearby Cairnhill Mansion has a reserve price of about $2,308 psf ppr.

The breakeven price of a re-developed Cavenagh Gardens is estimated to be between $2,138 and $2,223 psf ppr or reduced to $1,950 to $2,028 psf ppr if adjoining state land parcels are included.

But the selling price is expected to range from $2,500 psf to $2,600 psf in both cases, Mr Chua noted.

Nearby 200-unit Waterscape at Cavenagh was launched at an average selling price of about $1,880 psf in March last year. About 75 per cent of the units have been snapped up.

The average transacted price for two units sold in May and June this year was $1,939 psf, according to caveats lodged with the Urban Redevelopment Authority.

Mr Tan Kok Keong, OrangeTee’s head of research and consultancy, said developers’ risk appetite has decreased further amid global market uncertainties.

Smaller sites are still preferred as they also require a shorter time to be launch-ready, reducing the risk.

‘The sale of bigger prime collective sales can still take place but the unsold inventory in the market must first be cleared before developers’ appetite for these large sites comes back,’ Mr Tan said.

‘Even with the Government’s bumper supply of state land, collective sales are still the main way for developers to get prime freehold sites.’

The sale of Cavenagh Gardens, consisting of two 13-storey towers and a five-storey block, may fetch owners 35 to 45 per cent more than if they sold their homes individually. — PHOTO: PROPNEX

Source: Straits Times, 22nd Sept 2011

SALES of executive condos (ECs) have picked up strongly just days after the higher income ceiling for eligible buyers was backdated to include all unsold units.

Developers have reported quicker sales since last Wednesday’s announcement that the revised household income cap of $12,000 – up from $10,000 – would now apply to five other EC projects with unsold units.

The higher ceiling had initially applied only to EC projects launched after Aug 15, when the announcement was made.

ECs are a hybrid of public and private housing, reintroduced to the market last year after a five-year hiatus.

Qingjian Realty said that more than 50 units had been snapped up at EC project RiverParc Residence in Punggol since Wednesday, with the ‘majority’ of buyers falling into the newly eligible $10,000 to $12,000 income bracket.

This brings total sales to 468 units – or 93 per cent – of the 504-unit project.

City Developments’ (CDL) 602-unit Blossom Residences in Segar Road also found buyers for 20 units over the past week, bringing total sales to 400 units.

Mr Chia Ngiang Hong, CDL group general manager, said that about half of these additional buyers are from the $10,000 to $12,000 income segment.

‘We expect to see continued healthy sales based on the positive feedback from this group of potential buyers that the latest government announcement is beneficial as it offers them more choices for their selection,’ he added.

Similarly, buyers also more than doubled in number compared to a normal weekend before the revised ceiling at United Engineers’ 540-unit Austville Residences in Sengkang, a spokesman said.

About 350 units or 65 per cent of the 540-unit project launched in January have been sold, with visitors at the showflat also doubling over the weekend.

‘In particular, we saw quite a large number of interested buyers, who were previously disqualified due to their combined household income exceeding $10,000, coming back to our showflat to make a purchase,’ he added.

The spokesman added that the firm is positive about the outlook of ECs in the future. Moreover, new EC launches in the past year are better designed and promise a higher building quality, he said.

‘With increased incomes and widespread aspirations of living in a condominium among Singaporeans, young couples and HDB upgraders will always consider ECs as a housing option, especially when EC prices continue to be below those of private condominiums.’

The 406-unit EC project The Canopy in Yishun, which had only about 30 units left last week, also experienced a larger-than-usual crowd at its showflat.

MCC Land managing director Tan Zhiyong said, however, that the new ruling would have little impact on the project’s sales as fewer than 30 units were left unsold. About five units were sold over the weekend, he added.

The new ruling meant that about 600 more unsold units from five earlier EC projects – as well as units from the most recent EC project launched on Aug 31, Arc at Tampines – are available to buyers who meet the new income requirements.

They can now tap an estimated 68,700 additional households that qualify for ECs when the cap was lifted to $12,000, UOB Kay Hian property analyst Vikrant Pandey estimates.

Since the EC scheme returned last year, eight sites have been sold to developers. In all, 4,194 units have been released into the market for sale and over 3,000 more units are expected to be launched in the next 12 months, a Kim Eng research note said last week.

Soucre: Straits Times, 20th Sept 2011

SALES of new private homes defied the economic horror stories and the dampening effects of the Hungry Ghost Festival to post healthy numbers last month.

Buyers snapped up 1,348 homes last month, just shy of July’s 1,398. The total number jumps to 1,638 when executive condominiums (ECs) are included.

Experts say the sustained buying activity for a typically quiet month shows that Housing Board (HDB) upgraders are still buying and that confidence in property generally remains solid.

Last month’s numbers were also achieved despite a new policy that raised the income ceiling for new HDB flats and ECs, said real estate consultancy Colliers International’s director of research and advisory Chia Siew Chuin. This change would have creamed off some private market demand.

Suburban homes continued to lead the charge with 1,114 sales last month, comprising 83 per cent of total sales, according to Urban Redevelopment Authority (URA) data out yesterday.

This is the highest number of homes sold in the suburban region this year and the highest proportion of total transactions since URA’s monthly sales data series started in June 2007.

While suburban prices seem to have remained relatively stable and are likely to continue holding firm this year, Ms Chia noted that the band for mass market sales has moderated.

Prices ranged from $600 to $1,679 per sq ft (psf) last month, down from $705 to $1,742 psf in July.

This could be due to developers pricing units more competitively in the light of more choosy buyers, she added.

But most experts believe that developers are unlikely to lower prices in the light of last month’s healthy sales.

Dr Chua Yang Liang, head of research at Jones Lang LaSalle South-east Asia, said demand driven by population growth remains the market’s key driver.

This will continue to support the market beyond the economic uncertainty in the euro zone, he added.

Developers recently called for the Government to review the cooling measures in the coming months given fears that global economic woes could undermine the property market.

But experts say last month’s healthy sales coupled with low interest rates that should stay in place until 2013 have supported demand.

Last month’s launch of an ‘optimistic’ 1,435 units also kept pace with July, when 1,437 units were released.

Experts say developers might have fast-tracked new projects in case the economic climate deteriorates and scares buyers away.

There won’t be ‘double-digit’ growth in Singapore’s residential property prices this year, Capitaland Residential Singapore chief executive officer Officer Wong Heang Fine said yesterday at an event to unveil its Bishan Central condominium design.

‘Some developers are taking the opportunity to launch their projects while the market is still positive,’ Mr Ong Teck Hui, Credo Real Estate’s head of research and consultancy, said.

‘For this reason, we may expect more new projects to be launched during this period and sales take-up could be encouraging, depending on pricing.’

City centre and city fringe homes had less robust activity with the number of both new launches and sales significantly lower.

Experts add that between 15,000 and 16,000 new homes could be sold this year, barring further economic volatility.

They add that more affordable pricing for new project launches by cautious developers might also sustain sales.

This month, more than 500 units have already been sold at Sim Lian’s A Treasure Trove in Punggol at an average price of about $866 psf.

Credo’s Mr Ong said many mass market buyers are owner-occupiers with a long-term view and less influenced by the global market turmoil.

‘Many buyers (now) are probably not too negative about the economic outlook. (They) acknowledge that there will be some slowdown but not a bad recession and in their view, prices, even if they correct, may not be substantial,’ he added.

Source: Straits Times, 16th Sept 2011

THE raised income ceiling for executive condominiums has helped the Arc at Tampines project to post strong results at its first day of sales yesterday.

About 220 of its 574 units were snapped up despite average prices of $721 per sq ft (psf) that put it at the higher end of the spectrum for executive condominium projects.

First-day sales totalled only about 150 units at both the Blossom Residences executive condominium in the Bukit Panjang area last month and Belysa in Pasir Ris in May. Prices had ranged from $650 to $750 psf, said analysts.

The Arc, developed by a consortium that includes Hoi Hup Realty, has two-, three- and four-bedroom units as well as penthouses across nine 16-storey blocks at Tampines Avenue 8.

Experts say yesterday’s robust sales were mainly due to the project being the first executive condominium to hit the market after the income ceiling was raised from $10,000 to $12,000.

UOB Kay Hian property analyst Vikrant Pandey estimated that 69,000 additional households are eligible for such units now.

Developers also have to set aside at least 95 per cent of executive condominium units for first-time home buyers in the initial month of a launch.

Mr Colin Tan, Chesterton Suntec International’s research head, said demand for such units would have definitely increased with the raising of the income ceiling, and is likely to remain firm.

‘It will be a surprise if the Government does not release more executive condo sites because a lot of people are waiting for it. Demand was good even before the ceiling was raised,’ he said.

The private market might also be enjoying an increase in sales, with developers launching new projects after last month’s inauspicious Hungry Ghost Festival, he added.

The Straits Times understands that close to 200 homes at Sim Lian Group’s 882-unit A Treasure Trove in Punggol found buyers at its preview yesterday.

Sim Lian said in a statement yesterday that 300 units at A Treasure Trove will be released in its first phase at an average price of $866 psf.

These prices are lower than those of nearby mass market condominiums like Waterfront Gold, where homes were launched at prices just shy of $1,000 psf earlier this year.

Homes at the Waterview condominium, also close by, were offered at an average price of $838 psf at last November’s launch.

The 99-year leasehold project comprises 14 blocks of 16 storeys. Conservation bungalow Matilda House will also undergo a facelift to become the project’s clubhouse.

An artist’s impression of the Arc at Tampines. About 220 out of its 574 units were snapped up yesterday. — PHOTO: HOI HUP SUNWAY

Source: Straits Times, 9th Sept 2011

Exec condos now offer much better value for money than DBSS flats

An EC choice to make — ST ILLUSTRATION: MANNY FRANCISCO

THERE is some talk in recent months that Singapore’s red-hot property market is finally cooling somewhat, dampened by global economic uncertainty and fears of a property bubble.

But one segment of the market still sizzles: executive condominiums (ECs), which have Housing Board-style ownership restrictions but all the facilities of private condominiums.

Hundreds of people turned up at the launch of the latest EC project, Arc at Tampines, last week to view the showflat before balloting for buyers starts tomorrow for the Hoi Hup Realty-led project.

In July, buyers snapped up 568 EC units – mostly at Blossom Residences in Bukit Panjang and RiverParc Residence in Punggol. The number boosted sales of new private homes, which climbed 40 per cent to 1,954 units, from 1,394 units in June.

The numbers are a stunning turnaround for a type of housing which only a few years ago had so few takers that the Government stopped supplying land for ECs altogether.

ECs were introduced in 1996 to provide a new housing option for the ‘sandwich class’ of middle-income buyers who aspired to private condo-style living but were unable to afford the prices.

ECs boast facilities of private estates such as swimming pools and a gated community, but are subject to such HDB rules as an income ceiling for buyers and minimum occupation period before they can be sold. They are considered a hybrid of public and private housing on purchase, but are converted into private housing after 10 years, when units can be sold freely, including to foreigners.

From the introduction of the scheme till 2005, 23 ECs were launched, the last at La Casa in Woodlands. Then, in 2005, as the property market dipped, there was a supply glut. Property prices fell across the board. Hopes of massive capital gains for those who bought ECs earlier vaporised. New buyers could also afford private condos, and did not need ECs. This category of housing became unattractive and the Government stopped releasing land to build ECs.

The HDB was also just launching its Design, Build and Sell Scheme (DBSS) to let private developers build and sell public housing, promising home-buyers more innovative designs.

Analysts even said then that the Government may scrap ECs if DBSS proved successful since both types of housing target the same group – young families from the middle-income group.

How things have changed in five years. Today, it is ECs that are popular and the DBSS scheme that has become unattractive.

The HDB is reviewing the DBSS programme. National Development Minister Khaw Boon Wan has suspended all future land sales for DBSS projects, even while 11 sites have been sold as EC projects since last March.

Why the reversal of fortunes?

First, the perception now is that ECs offer much better value for money. Private property prices have climbed to record highs and put homes out of the reach of many aspiring HDB owners, but some ECs remain affordable.

The Arc at Tampines may have set new records for EC prices at slightly above $700 psf. But it is still much cheaper than similar mass-market condos in the area such as Waterfront Gold, launched at just below $1,000 psf earlier this year.

One reason for the lower prices is that under HDB rules, only families who are citizens can buy ECs. There is an income ceiling, which was recently raised from $10,000 to $12,000 a month. First-time buyers also qualify for various housing grants.

In contrast, DBSS flats have been priced at a big premium over new subsidised HDB flats, which are their competitors. The Centrale 8 project in Tampines was priced in the $600 psf to $700 psf range – almost double that of comparable build-to-order (BTO) HDB flats.

Secondly, resale conditions favour buyers of ECs. After five years, DBSS flats become HDB resale flats, which are subject to HDB ownership restrictions which change from time to time. The latest rules prohibit foreigners and private property owners from buying HDB resale flats. In contrast, ECs eventually become private property, which can be sold to any Singaporean after five years, and to foreigners after 10.

An EC buyer thus competes with fewer people when buying a unit; but can sell the unit after five years to a much wider pool. This explains their capital gains after the property market rebounded. Many EC projects were launched in the $360 to $460 psf range. They fetched an average of $683 psf from June to date on the open market when sold, according to Credo Real Estate’s head of research Ong Teck Hui.

For example, Westmere, an EC in Jurong, was launched in 1996 at $400 psf. This year, its resale transactions averaged $707 psf – a price appreciation of 77 per cent. In its vicinity, the average price of private condominium Parc Oasis rose from $666 psf in 1996 to $760 psf this year – a 14 per cent increase.

This has reinforced buyers’ perception that, barring a crash in the market, ECs are a ‘sure win’ proposition.

The factors underpinning the rise of ECs and the decline of DBSS – and the clear preference of buyers today – raise the question of whether the Government should just let the DBSS scheme lie fallow and release more land for ECs.

In the past, the DBSS scheme was conceived as an experiment to outsource development of public housing to the private sector, leaving the HDB to eventually assume a more ‘regulatory role’. But this policy objective is less relevant today, as Singaporeans want affordable public housing provided by the state, not pricey private developers.

The right mix of public and private housing for Singapore may well be a simple one: new subsidised HDB flats on one end of the spectrum; private property on the other; and executive condominiums as the in-between class, catering to the aspirations of middle-class HDB upgraders.

Source: Straits Times, 7th Sept 2011

ECONOMIC uncertainty has led to a more cautious round of bids for a condominium site in Punggol.

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

Condominium developers are upping the stake by offering luxurious facilities such as spa pavilions

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

Pasir Ris, Yishun plots are first since raising of buyers’ income ceiling

TWO executive condominium (EC) sites have been put up for tender, the first since the buyers’ income ceiling was raised.

The first is on a 199,951 sq ft site in Pasir Ris Drive 3. It has a plot ratio of 2.1, so it could yield 390 units.

The land is connected to Pasir Ris MRT station and near Tampines Expressway. Meridian Junior College and Casuarina Primary School are in the area.

Analysts expect up to seven bids with offers of up to $125 million, which would translate to about $300 per sq ft per plot ratio (psf ppr).

The tender closes on Oct 11.

The other sale is for a 292,283 sq ft site at the corner of Yishun Avenue 7 and Canberra Drive that could house up to 725 homes.

Sitting on the northern fringe of Yishun New Town, the site is near Yishun MRT station and bus interchange while Chong Pang Community Club and Yishun Stadium are in the area.

Property experts tip a top bid of between $183 million and $197 million, or between $250 psf ppr and $270 psf ppr. The tender closes on Oct 25.

Mr Png Poh Soon, head of research and consultancy at Knight Frank, believes this plot will attract less interest than the Pasir Ris plot, which is nearer to the sea and Pasir Ris Park.

New rules mean those earning up to $12,000 can now buy an EC unit. Previously, those earning up to $10,000 were allowed to buy such homes.

Industry insiders expect that while ECs will garner more interest due to the increased buyer pool, developers will not be rushing in for the sites, which have leaseholds of 99 years inclusive of a four-year construction period.

But Mr Png believes the EC sector remains positive, helped by the greater flexibility developers now have in pricing such projects.

‘At the current low interest rate… EC units can be priced up to $1.6 million, up from $1.3 million previously,’ he said.

But ultimately, how much buyers are prepared to pay will determine how great the demand for ECs will be, said Mr Ong Kah Seng, Cushman and Wakefield’s senior manager of Asia-Pacific research.

‘While more developers will be open to EC developments, the bid prices submitted are… unlikely to be excessively optimistic. This is in line with a general cautious economic and property environment,’ he said.

The Urban Redevelopment Authority has also launched two other residential sites which could yield a total of 770 units.

One in Jalan Loyang Besar is sized at 185,938 sq ft and expected to attract between five and eight bids.

It could accommodate around 355 units and attract offers of up to $180 million. The tender closes on Oct 4.

The other is a 322,368 sq ft site in Flora Drive and could yield 415 homes. Top bids are tipped at about $158 million. The tender closes on Oct 19.

Source: Straits Times, 26th Aug 2011

Outlook for housing market is uncertain, making it hard for would-be home buyers and investors to decide

Home buyers, both occupiers and investors, have been scratching their heads more than usual lately on the vexing question of when to enter the market.

Even leaving aside the current global stock market and economic turmoil, it is a perplexing picture.

Will private home prices keep inching upwards, as they have done persistently even after the various market cooling measures brought in by the Government?

Or will the warnings of an oversupply of new homes, coming from certain quarters, prove to be accurate and lead to a sharp slide in prices?

Trying to evaluate the outlook for the local property market has been made even more baffling as a result of policy shifts on public housing, which have been thrown into the mix recently.

Prime Minister Lee Hsien Loong announced during his National Day Rally speech last week that the income ceiling for new build-to-order (BTO) HDB flats will be raised from $8,000 to $10,000, while that for executive condos (ECs) will go up from $10,000 to $12,000.

As a result, an additional 99,161 households will be eligible for BTO flats and an estimated 68,700 additional households for ECs, UOB Kay Hian property analyst Vikrant Pandey has calculated.

The pace of building will also be ramped up sharply, with 25,000 BTO flats to be launched both this year and next – an unprecedented 50,000 new HDB flats in total in just two years.

These changes in the public housing sphere are set to send ripples through the closely linked private market, shrinking the private demand pie especially for suburban mass market homes as middle-income buyers relook their choices.

Dr Chua Yang Liang, head of research at Jones Lang LaSalle South-east Asia, estimates a possible 5 per cent to 15 per cent decline in annual demand for new private housing, translating to 700 to 2,000 units.

This is provided public housing supply keeps pace with the increased demand by this group of new eligible buyers, he said.

The Government has also released a bumper supply of state land – largely in suburban areas – to try to stem rocketing prices in the private market.

This has led to concern about an oversupply in the next few years as the potential inventory builds up.

Coupled with a tighter immigration policy, demand could further slow.

This has sparked growing talk that suburban home demand will soften as prices head for a correction. This might cause home owners chagrin, but home hunters would welcome such a price slide.

More cooling measures unlikely

Some home buyers might be hoping for a fifth round of government measures – after the latest in January – to further cool the market and bring prices down.

However, experts say that this is unlikely for now, with the combination of growing macroeconomic uncertainties and the shadow of an oversupply of homes in the primary market.

Private home prices have also been moderating for seven consecutive quarters, inching up just 2 per cent in the recent April to June quarter.

In addition, land prices have come down at some recent government land sales tenders, indicating that the once bullish sentiment has become more subdued – although competition for good sites is still keen.

An RBS report by analysts Fera Wirawan and Bryan Lim said the measures to cool home prices seem to be concentrated on the HDB market. They also see lower policy risks now – in terms of a fresh round of cooling measures for private homes – in view of current global economic uncertainty.

‘In addition, potential measures to stem speculative demand in the private home market could have limited impact, given the highly punitive policy introduced earlier (in January),’ the report noted.

Where are prices headed?

Experts differ on where they see prices headed, with some predicting firm home prices in the light of low interest rates for the next two years and the strong holding power of developers and households.

Location also comes into play, with choicer sites – especially those close to MRT stations or transport nodes – expected to hold up better in the event of softening demand.

Those who expect prices to fall mostly see it happening in 2013 and 2014, as the construction of many suburban projects reaches completion.

Prices for the rest of this year are likely to hold firm, said Mr Joseph Tan, CB Richard Ellis (CBRE) executive director of residential.

But experts admit that the market outlook has been clouded by the global market volatility, the European sovereign debt crisis and risks of another global recession, with the United States economic recovery stalling.

How these events pan out in the next few months will have an impact on the take-up of new launches and where prices are headed, they predicted.

Goldman Sachs analyst Paul Lian said in a report released this month that he leans towards an oversupply of housing in 2013 to 2014 but is mindful of arguments made to the contrary.

‘At the very least, the quantum shift from undersupply to either balanced or oversupply is sufficient to take the edge off home prices,’ he noted. He expects prices to moderate by 15 per cent over the next 18 to 24 months.

SLP International research head Nicholas Mak sees a more than 50 per cent chance of a correction in the next three years. Whether this will be a short blip or sharp drop, however, depends on how the macroeconomic situation plays out.

RBS’ analysts, however, expect mass market homes to be in short supply till 2014 due to the population jump in the past five years and the lower-than-average home completions in the past decade.

The population rise over the past five years averaged 3.5 per cent a year compared to the 1.9 per cent a year growth from 1996 to 2005, they noted, driven by an increase in the number of non-Singaporeans.

‘Work permit holders who earn less than $1,800 per month accounted for the largest group of non-Singaporean citizens. This had heightened demand for mass residential homes and the segment would continue to be undersupplied until 2014,’ the report added.

When and what to buy?

This has thrown up the question of when buyers should make their move, in the light of the various factors and uncertainties in the market.

While home buyers often try to time the market, experts say that this is very difficult.

Affordability should be the key consideration instead.

Buyers also have to consider their motivations for purchase – budget, urgency of need and availability of what they like, for example – and the type of product they are looking for.

•Resale home or new launch

Mr Tan Kok Keong, OrangeTee’s head of research and consultancy, also said that buyers should be more cautious in purchasing new homes with benchmark prices as the downside risk for such units is greater during a downturn.

•Investment or owner occupation

‘If you can afford only a Japanese car, don’t go and buy a Mercedes,’ Mr Lim advised.

Source: Straits Times, 21st Aug 2011

Larger supply, smaller expat packages put pressure on rents

RENTS of posh homes might keep falling in the light of an increased supply and less generous housing packages for expatriates.

High-end home rents have dipped by about 2 per cent in six months, according to GPS Alliance associate agency head Jack Teo, while as an OrangeTee agent said, some of his clients have had to cut rents by about 5 per cent to 7 per cent to land a tenant.

Upscale projects such as The Orchard Residences, Cliveden at Grange and The Orange Grove have recently been completed and they have added to the number of units on the market.

Property agents said landlords asking for a monthly rent of more than $10,000 are now finding it harder to find tenants.

Pressure on rents is also coming from cost-conscious firms putting expat staff on local terms. This means they no longer get a separate housing allowance but must budget for rent from their salaries instead.

‘Multinational corporations have lower budgets now so there’s no longer a separate housing package. And when a tenant has to budget out of his pocket, he is usually more sensitive to price and tends to want to spend less,’ said the OrangeTee agent.

The quieter market can also be partly attributed to a seasonal drop as expats usually look for homes from May to early July before the August school term starts.

Mr Markus Tay, managing director of Luxe Group, said it takes about two to five months to find a tenant for luxury homes now – about 30 per cent more time than six months ago. The market had started slowing then as the supply of homes started to enter the market.

Although landlords eager to score a tenant have cut rents, prices have not declined much overall, he added. GPS’ Mr Teo noted that owners are usually willing to look again at their pricing after vacancies of about three to six months, but others have holding power and might be unwilling to budge from their initial asking price.

The high-end market might firm up again next year once the number of posh completions start to slow and the segment stabilises, he added.

Experts said upscale homes are usually owned by wealthy individuals who see their purchase as a form of investment and wealth preservation, and so are are less concerned about achieving high rental yields.

Rental yields for prime areas are among the lowest across the island, according to a Kim Eng report. Orchard Road yields were just 2.8 per cent, Sentosa homes offered 2.6 per cent while homes in Newton languished in last place with 2.4 per cent.

Suburban yields were as high as 4.1 per cent in Tampines and 4.8 per cent in Sengkang – the most attractive estate in the rental market.

Source: Straits Times, 20th Aug 2011