Modest top bid of $141 million shows developers cautious amid global economic turmoil

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

Those with provisional licences given six more months to pass industry test

PROPERTY agents who have yet to pass a manda-tory industry exam by the year’s end will have six more months to do so.

The Council for Estate Agencies’ (CEA) new deadline of June 30 next year will spell respite for 2,753 provisionally licensed agents who, as of Aug 31, make up 8 per cent of some 33,000 registered property agents here.

Earlier this year, the CEA said agents who brokered at least three transactions over the last two years have up to Dec 31 to pass the Real Estate Salesperson Examination. They were given provisional licences in the meantime.

CEA’s director of licensing and investigation, Ms Purnima Shantilal, said the extension stems from the council’s acknowledgement that agents need more time.

‘The extension will thus help them to better prepare for the exam. The CEA will work with the estate agents closely to ensure that their salesmen take the exam by the deadline,’ she said.

The new deadline also applies to those sitting the Real Estate Agency Examination, which is for partners, directors and key executive officers of property agencies.

The CEA, a statutory board under the Ministry of National Development, made it mandatory for all agents and those running agencies to take proficiency exams to raise the professionalism of the industry, which was largely unregulated before the council was set up in October last year.

But property agencies said they received feedback from some agents who had problems passing the exams set in English mainly because they were not proficient in the language. The CEA said it has arranged with the Institute of Estate Agents to come up with Mandarin courses to teach agents how to pass the Real Estate Salesperson exam.

The exam is a mix of multiple-choice and short-answer questions testing issues such as an agent’s knowledge of property law and regulations.

PropNex chief executive Mohamed Ismail said agents need to take the exam more seriously, now the CEA has given them more time to do so, as well as try to overcome the language barrier.

This is because the CEA expects agents to understand English, which is used in documents in property transactions.

‘They should not expect the CEA to keep extending the deadline. The reason the CEA has announced this extension is really because it recognises that this job is a ‘rice bowl’ for many people, so agents now have to play their part,’ he said.

The news comes as a relief to Mr Colin Zhang, 30, a property agent with real estate firm Cushman & Wakefield.

‘I’ve not really had the time to sit down and study for the exam, which deals a lot with property law,’ he said.

‘If not for the extension, I would have had a real headache by the year’s end. Now I have more time to study, the exam shouldn’t be a problem.’

The CEA will also conduct its first licensing and registration renewal exercise – for those who have passed the mandatory exam and whose registration expires on Dec 31 – from Oct 1 to Nov 15 and update the list of property agents registered for next year.

They are also urged to undergo six hours of continuing professional development (CPD) before March 31 next year.

CPD is a scheme to update agents and property companies on the latest government policies and real estate procedures.

The courses, which are recognised by the CEA, are conducted by vendors from the public and private sectors.

Source: Straits Times, 22nd Sept 2011

S’poreans hold back but foreign demand holds steady in first 8 months

SINGAPOREANS have bought far fewer homes so far this year compared with the figure in the same period last year.

They have retreated from the market in droves as tough cooling measures and sky-high prices took a significant toll on buying demand.

But foreigners have apparently been less concerned about these factors. This has boosted their share of the non-landed housing pie to a record high of 33 per cent in the first eight months of this year.

The figures emerged in an analysis of caveats lodged with the Urban Redevelopment Authority carried out by property consultancy Savills.

The 33 per cent figure is a marked rise from the 28 per cent market share held by overseas buyers for all of last year.

Purchases by local buyers sank to a near-record low of just 65 per cent in the first eight months, down from 70 per cent for all of last year. Since 1995, the only other year with a lower proportion was 2007, when Singaporeans accounted for only 64 per cent of the market.

Singaporeans bought 11,254 apartments in both the primary and secondary markets this year. This is sharply down from the 15,947 units that were sold to local buyers in the same period last year.

By comparison, purchases by foreigners, including permanent residents (PRs), held relatively firm at 5,803 in the first eight months of this year, down a whisker from 6,056 units in the same period last year.

The remainder of the purchases were made by companies.

Experts say the four rounds of government cooling measures – including tighter financing rules and a sellers’ stamp duty of up to 16 per cent – have sent local speculators scurrying from the market, with subsale volumes plunging about 25 per cent year-on-year.

Some Singaporeans might also have been deterred by record prices, choosing instead to buy commercial and industrial space in their search for higher yields, the experts added.

But foreigners, especially PRs, remain active because Singapore is still viewed favourably for business, education, investment and as a place to live, said Mr Png Poh Soon, Knight Frank’s head of research and consultancy.

‘For foreign investors, the strong, stable Singdollar appeals to them as they seek to diversify their funds,’ he noted.

Colliers International’s director of research and advisory, Ms Chia Siew Chuin, said tough cooling measures in mainland China and Hong Kong might also have diverted some buying interest to the market here. The flow of hot money from the troubled Western nations to the East has also played a part.

‘Additionally, those with ample funds and looking for alternative investment avenues were diverted to non-residential segments as a result of the various measures,’ she added.

‘These include the strata-commercial and industrial markets, where buyers were encouraged by the comparatively smaller capital outlay required and higher returns expected from such properties.’

Record prices are also putting off Singaporeans more familiar with the cyclical nature of the market, some experts say.

Mr Colin Tan, Chesterton Suntec International’s research head, said: ‘Because locals have been around long enough, they are more likely to feel that current high prices are unsustainable.’

Mr Alan Cheong, Savills’ research and consultancy associate director, agreed that the drop could be due to more Singaporeans holding back on purchases in anticipation of a price drop due to the onslaught of upcoming supply.

On the landed front, local buyers accounted for 88 per cent of transactions, similar to the figure last year. Strict conditions apply to foreigners buying landed homes. They need permission from the Land Dealings (Approval) Unit before they can own landed property.

But the 1,989 landed homes local buyers bought in the first eight months were well down from the 2,723 units in the same period last year.

Savills said strong foreign buying interest is poised to strengthen further on the back of more overseas funds flowing into Asia and more tightening measures in Hong Kong and mainland China.

While the Singapore Government is expected to tighten immigration policy, foreign talent is still needed to support the country’s economic growth, and this will ensure continued foreign interest in the housing market, Colliers’ Ms Chia said.

Singapore’s reputation as a safe investment haven, conducive investment environment, strong currency and triple-A credit rating will also sustain foreign interest, she added.

But Knight Frank’s Mr Png cautioned that foreign demand is still dependent on overall macroeconomic conditions such as how the uncertainty in Europe and the United States pans out. Overseas purchases fell in 2008 during the global financial crisis, he pointed out.

Source: Straits Times, 17th Sept 2011

Suburban 99-year plots could yield over 1,300 new homes

THREE residential property sites in suburban areas have been put up for sale by the Government in a move that could yield well over 1,300 new homes.

This is among the largest number of potential new homes in a single release of residential sites so far this year.

The three 99-year leasehold sites are in Punggol, Upper Bukit Timah and Yishun.

The largest plot is at the junction of Punggol Central and Edgedale Plains. The 218,035 sq ft site has a plot ratio of 3.0 and can be built up to a maximum of 654,105 sq ft.

Located in the eastern part of Punggol Town, it could yield up to 610 homes. Experts say the site could fetch a top bid of up to $210 million or $320 psf per plot ratio (ppr). The tender closes on Nov 3.

Another site at Chestnut Avenue has been tipped by analysts to be a favourite among developers because of its location within the popular Upper Bukit Timah neighbourhood. The 201,285 sq ft plot of land can be built up to 422,710 sq ft, yielding about 380 homes.

Mr Nicholas Mak, executive director of research at SLP International, expects the site to attract several major developers, with a top bid of up to $195 million, or $460 psf ppr. The tender for this site ends on Nov 24.

The third site is at Yishun Ave 1 and is 181,910 sq ft. With a maximum gross floor area of 382,011 sq ft, the plot could yield 355 units.

SLP’s Mr Mak said the site could fetch a winning bid of $130 million to $145 million, which translates to $340 to $380 psf ppr. The tender ends on Nov 15.

Fears about an oversupply of homes hitting the market over the next few years appear to have injected at least some caution into the property industry.

But new home sales figures released yesterday indicate that buyers are still keen to buy, with 1,348 new homes sold last month.

Mr Ku Swee Yong, chief executive of International Property Adviser, said this is one of the reasons why he remains positive developers will still be interested in Government land sites.

Another site – at Bishan Street 14 – has been made available through the Reserve List. This means the land will come up for sale only when any interested developer commits to bidding for the site above or at a set minimum price.

The Bishan land parcel is next door to a site that was bought by CapitaLand earlier this year for a whopping $550 million or $869 psf ppr, an amount that exceeded analysts’ expectations.

While some analysts feel this plot will not be triggered for sale soon, others said it could catch the attention of developers looking to increase their land banks.

Source: Straits Times, 16th Sept 2011

Singaporeans may be cautious as prices have not recovered from peak or they may have bought landed homes

Singaporeans may be cautious as prices have not recovered from peak or they may have bought landed homes

FOREIGNERS are snapping up posh apartments and contributing to much of the activity in the high-end market that has been languishing since the heady days of 2007.

Foreigners, including permanent residents, have bought 162 non-landed units with a price tag of more than $5 million in the first half of this year.

That is about 60 per cent of the transactions at the top-end market, according to an analysis by Cushman and Wakefield of caveats lodged with the Urban Redevelopment Authority. These include both primary and secondary sales.

On that same basis, foreign buyers accounted for 46 per cent of the high-end market last year and only 24 per cent in 2005.

Chinese and Indonesians have dominated the upmarket segment this year, making up almost half of all high-priced purchases. They were followed by Malaysians, British and Indians.

Singaporeans have retreated, accounting for just 20 per cent of purchases of more than $5 million in the six months to June 30.

Last year, they had 34 per cent of the market and 25 per cent in 2007.

Companies make up the rest of the transactions.

Experts say the increased interest from foreigners is not entirely surprising, due in part to the buzz created by the two integrated resorts and the country’s growing strength as a financial hub.

Dennis Wee Group director Chris Koh said many see Singapore as the most stable country in the region, with a strong government, developed infrastructure and quality medical and educational services.

Mr Colin Tan, Chesterton Suntec International’s research head, noted that the foreigner share has increased mainly due to the reduced interest from locals.

‘In 2007, many of the locals bought into the high-end segment in a big way. Some might not have seen their prices recover yet and so demand is lower now,’ he added.

SLP International research head Nicholas Mak said high-end homes have always depended significantly on foreign buyers.

Demand from Singaporeans could have fallen as those with bigger budgets might have decided to go into the landed home segment instead, which has recorded robust price growth of 31 per cent last year.

‘Since 2007, the landed homes market has seen stronger interest, with Sentosa Cove prices influencing those on the mainland. Singaporeans see it as a lifestyle and investment choice and are starting to see more value in such homes,’ added Mr Mak.

The luxury market – defined here as an elite club of projects that have achieved both unit prices of $3,000 per sq ft (psf) and total quantums edging past $5 million – has flatlined since last year.

There were 79 such homes sold in the first eight months this year while 73 were picked up in the same period last year. But go back to the boom of 2007, and 237 posh apartments found buyers in the same period.

Prices are also languishing about 6 to 8 per cent below their 2008 peak, despite the property boom that has seen all other segments surpass their historical highs.

Only around two dozen upscale projects made the elite club list of $3,000 psf and $5 million-plus pricing, including Nassim Park Residences, Tomlinson Heights and The Orchard Residences.

It was a foreign buyer who smashed the unit price record this year, picking up a 3,003 sq ft unit at The Marq on Paterson Hill for just under $6,400 psf – or about $19 million.

City Developments executive chairman Kwek Leng Beng said now is not the best time for luxury projects because sophisticated investors are waiting for the market to be more certain.

Transactions are few and demand is not as good as before, acknowledged Mr Kwek, who was speaking on the sidelines of a Real Estate Developers’ Association of Singapore event on Friday.

Source: Straits Times, 12th Sept 2011

But surge unlikely despite weekend crowds, say experts

THERE were surprisingly brisk sales at property projects over the weekend, to give the month a rousing start after weeks of slow action.

No one in the market had expected sales to hit the levels of a year ago, but the numbers in recent days have lifted sentiment.

The Luxurie in Sengkang has sold 180 units since sales started last week at an average price of $980 per square foot (psf). Most of the project’s 622 units are two-bedders and three-bedders.

Its pricing is similar to that of neighbouring mass-market development H2O Residences by City Developments, but its proximity to Sengkang MRT and bus interchange makes The Luxurie more attractive, said DMG and Partners Research. The Sengkang Public Library and Community Hub are also nearby, as are CHIJ St Joseph’s Convent and Rivervale Primary.

The Meyerise, a freehold development in Meyer Road, has racked up about 80 sales since it started last Friday. Singaporeans and permanent residents comprised about 90 per cent of all buyers. The project has 239 units, a mix of two-bedroom, three-bedroom, four-bedroom and penthouse units. The average price was $1,950 psf, with three-bedroom units the most popular among buyers.

The Meyerise is minutes away from Parkway Parade and Katong Shopping Centre, with Playground@Big Splash and East Coast Park also nearby.

There were 24 units shifted at EuHabitat in Jalan Eunos over the weekend, bringing the total number of sales to 472 out of the 548 apartments available.

Another 20 homes were sold at Boathouse Residences in Upper Serangoon over the same period.

This strong response was also mirrored in the executive condominium market, where applications for the Arc at Tampines were expected to surpass 1,180 by yesterday’s 10pm deadline.

With 574 units up for grabs, this translates to a healthy subscription rate of about 2.1 times.

Anecdotal observations suggest that several showflats, including those at the Arc at Tampines and The Luxurie, were packed with prospective buyers, although that may not translate into big sales numbers.

Associate Professor Sing Tien Foo from the department of real estate at the National University of Singapore’s School of Design and Environment said he was surprised by the crowds. ‘I thought a lot of people are waiting to see how the global market situation will turn out,’ he said.

‘Some people could be going into the showflats to look for inspiration, others could be going out of curiosity, to see what the market situation is like before making a decision.’

ECG Property, which marketed several properties over the weekend, said that while crowds continued to visit showflats, they are not as big as those seen at the beginning of the year.

But ECG chief executive Eric Cheng is optimistic that the next few months will be better: ‘September is not a good month. We’re just getting over the stock market shock and the ghost month has barely ended. The market is still looking very uncertain. Some people may have lost money on the stock market and they might not be looking to put money into property for now.’

But Mr Steven Tan, OrangeTee’s director of residential, is confident that the demand for new homes will continue, despite lingering economic worries.

‘Now the main group of buyers are those who are purchasing for their own stay. Transactions from this group are driven by genuine demand, and they are less affected by all these economic uncertainties,’ he said.

Low interest rates will also go some way towards encouraging new home sales, say analysts.

The number of new home sales, including executive condominiums, hit 1,954 in July.

But the stock market turmoil last month – the Straits Times Index fell 9.5 per cent over the month – has market watchers keenly awaiting August’s figures.

Source: Straits Times, 6th Sept 2011

Trend due to widening income gap and growing number of lonely seniors

For the past 18 years, Mr Adam Teo’s home has been a two-room rental flat in Toa Payoh, littered with books, toys and clothes.

Moreover, the 24-year-old is now his family’s sole breadwinner, supporting his mother and two younger siblings.

Years ago, his father became mired in gambling debts, and eventually left home without a trace. Mr Teo had to drop out from his polytechnic diploma course.

He now works as a packing assistant and takes on odd jobs such as distributing fliers, just to feed the family and pay his siblings’ school fees.

Ask someone like Mr Teo if he aspires to have a home he can call his own, and the answer is invariably ‘yes’.

‘Our goal is to buy a flat eventually, but life is getting harder, and things more expensive,’ he said.

The role of the rental flat, meant for the poor and needy who cannot afford their own home and lack family support and other housing options, has come into sharp focus again following the recent National Day Rally.

Recognising that there are Singaporean families who cannot afford to buy flats, Prime Minister Lee Hsien Loong announced in his rally speech that he was raising the rental supply to 57,000 by 2015. The previous target, announced earlier this year, was 50,000 by next year.

The Housing Board’s current stock of rental flats hovers at about 46,000, spread over areas such as Ang Mo Kio, Toa Payoh, Bedok, Tampines, Bukit Merah, Jurong and Woodlands.

The HDB, responding to queries from The Sunday Times, said the 7,000 new flats would be built in areas such as Punggol, Sembawang, Sengkang, Yishun and Bukit Batok, among others.

Rental flats are managed by the HDB. They come in one- and two-room options. Their monthly rents after subsidy range from $26 to $275.

As of last month, there were 1,572 applicants in the rental queue. Waiting time is about 61/2 months.

But the period of peak demand seems to have passed. That was in 2008 when there were about 4,000 applicants, with the waiting time stretched out to as long as 21 months.

More households are renting now, with the number having grown to 45,000, up from 40,556 households reported in 2008.

On average, about 1,800 rental flats are returned to the HDB per year, mainly due to tenants buying their own homes or moving out to live with family members.

Asked for her views on the increased supply, Ms Lee Bee Wah, chairman of the Government Parliamentary Committee for National Development, said it should help ease the waiting time.

During the rally, PM Lee also said the HDB would postpone the demolition of some Selective En Bloc Redevelopment Scheme (Sers) blocks. These would be turned into rental flats to cater to more families who need this leg up.

Families made up 83 per cent of the 2,300 rental applications last year, while singles made up the rest under the Joint Singles Scheme.

Under Sers, selected older blocks, some in prime areas, are redeveloped to optimise land use.

Currently, about 1,400 of the 2,200 Sers flats are offered at rental market rates while 800 are set aside for interim rental housing, which caters to the less needy.

These units are leased to operators like EM Services, LHN Group and the Katong Hostel, who take in Singaporeans, permanent residents, students and those with employment or S-Pass permits.

The HDB said ‘there are several vacated Sers sites that are leased out in the interim, before demolition’, and that it is looking at other Sers sites for use for rental housing in the future.

Earlier this year, some observers – pointing to the clamour for more rental flats for the needy – had urged the use of such flats for this purpose, as a matter of priority.

The HDB has also said that it has stepped up regular enforcement in stopping the illegal subletting of rental flats. There were 300 such cases from 2009 to last year, and 37 such cases so far this year.

The recovered flats have since been reallocated to needy families.

Analysts said that while the Government is tackling the immediate problem, the larger issues, centred on the housing of the poor and needy, are more complex and need further study.

Associate Professor Tan Khee Giap from the Lee Kuan Yew School of Public Policy said the ‘worrisome’ trend of the increased demand for rental housing is the economic outcome of a widening income disparity, caused by rapid globalisation.

Last year, while Singapore’s gross domestic product hit a high of 14.5 per cent, the Gini coefficient – a measure of income inequality on a scale of 0 to 1, with 0 denoting perfect equality – also rose to 0.452, up from 0.448 in 2009.

Prof Tan said that those who need subsidised rental flats now will have difficulty affording even the most basic flats later on.

‘A solid infrastructure needs to be in place to allow single-income households to become double-income earners if possible. And to ensure these families remain small, and their children are properly taken care of and educated,’ he added.

About 44 per cent of rental applicant households last year earned below $800 a month, while the rest earned between $801 and $1,500 a month.

Already, Prof Tan said, the Workforce Development Agency (WDA) is partially correcting these imbalances through the retraining of workers, but ‘it would take time, perhaps an entire generation, to address these issues’.

PropNex chief executive Mohamed Ismail said the larger picture is that the existing stock is just not enough to cater to people who fall through the cracks.

‘Perhaps some are going through a bad patch and have to sell their homes. These people need time before they can get back on their feet. Increasing rental flat unit numbers is a clear signal that the Government is recognising the problem,’ he said.

The Government, he noted, is already helping them, especially the first-timers.

He cited, as an example, new Build-To-Order two-room flats, which were expected to cost about $120,000 before the grants, costing $80,000 or less with the grants.

‘Bear in mind that there will always be people, a small minority, with very different motivations from others, and who are content to rent and have no intention of owning a home,’ he added.

But most rental unit residents The Sunday Times spoke to expressed optimism and hope for a better future.

Dispatch rider Muhammad Irwan, 25, said he was saving up, and that he and his mother, a single parent, will be able to afford a place of their own in six years.

‘One day I hope to stop paying rent, and that my mum and I will each have a room of our own,’ he said.

Technician Jeffrey Chua, 47, said it was important to focus on the happier things to keep spirits up.

‘I’m not educated, and my pay does not rise with the cost of living. Everything I do now is for the sake of my two sons. I’ll be happy if their future is bright.’

Seniors need them most

With new rental flats being added, the issue of who gets priority has to be looked at, noted Ms Lee.

‘We need to prioritise, to give to those who need it. Besides divorcees with children, those old, lonely people who can no longer find work, and cannot afford market rental rates, deserve the most attention,’ she said.

Neighbourhood-based voluntary welfare organisations (VWOs), such as the Lions Befrienders Service Association, have also noticed a rise in the number of seniors living alone in rental flats.

It takes care of 2,600 needy old folks above 65 years of age, all of whom live in such housing.

Said the organisation’s spokesman: ‘With an ageing population, the number of seniors living alone will increase. It’s a constant challenge to find volunteers to provide them with social support and uplift them.’

The Thye Hua Kwan Moral Society’s director of senior activity centres and health, Mr Joseph Cheong, said: ‘This generation of people, in their 70s and 80s, are living longer with better medical care. With no social support, they have nowhere else to go, so the least we can do is to make their lives easier.’

The VWO is responsible for about 2,030 rental flats.

In Singapore, the average life expectancy at birth last year was 81.7 years, up from 75.3 years in 1990.

Ms Lucy Tan, 65, the centre manager of Peace Connect, which takes care of 2,296 rental flats, believes more can be done in housing estates to prepare for the silver tsunami.

She said some one-room units may be unsuitable for seniors as they are cut off from the residential community or have little ventilation. ‘If ageing-in-place is to be encouraged, then more deliberate social planning is needed. But to be fair, HDB, by and large, has done a fine job in upkeeping the flats,’ she said.

These smaller units could also cause strained relations, said Ms Peh Kim Choo, assistant director of Hua Mei Care Management Service, which is under the Tsao Foundation.

Currently, one of the ways seniors can qualify for rental housing is to register under a joint application.

‘Sometimes this does not work, as it puts two total strangers with different lifestyles together in a very small living space. And that often creates a hotbed that breeds conflicts,’ she added.

Source: Straits Times, 21st Aug 2011

Yields of some condos reach above 5% despite slowing economy: Study

RENTAL properties are less profitable for landlords in these tougher economic times, but there are still some condos where yields can reach 5.7 per cent.

Adam Park Condo, Blossoms@Woodleigh, Far Horizon Gardens and The Jade all have yields above 5 per cent.

Areas such as Sengkang, Woodlands and Chua Chu Kang have yields ranging between 4.4 per cent and 4.8 per cent, according to a study by Kim Eng Research.

They are all above the national average of 3.7 per cent, down a touch from last year’s 3.9 per cent average yield.

But prime areas such as Orchard, Newton and Sentosa failed to measure up, with yields between 2.4 per cent and 2.8 per cent.

Rental yield is the annual rent divided by the property’s sale price.

Kim Eng analysed gross yields based on the Urban Redevelopment Authority’s rental and caveat data for non-landed developments with at least 10 rental contracts signed in the second quarter of this year.

Market experts say the quantum prices of properties in a neighbourhood play a significant role in determining the average rental yield.

‘If you buy a mass-market home for $1.5million, you might be able to get between $4,000 and $6,000 in rent, depending on location,’ said Dennis Wee Group director Chris Koh. ‘That’s compared to a Sentosa place that could cost up to $3 million and bring in only $8,000 a month,’

ERA Realty key executive officer Eugene Lim said leasehold properties are normally cheaper than freehold ones. Many leasehold properties are in suburban neighbourhoods, so this may have helped lift rental yields.

‘Tenants aren’t concerned about whether a property is freehold or has a 99-year lease. All they want is somewhere that looks nice in a convenient location,’ said Mr Lim.

Shoebox units, typically less than 500 sq ft in size, come with lower sale prices.

Kim Eng cited Parc Imperial, a 138-unit Pasir Panjang project near the upcoming Haw Par Villa MRT station that comprises mainly smaller flats. The project has a rental yield of 5.7 per cent. Resale units recently sold for an average of $1,333 psf, with median rents hitting $6.28 psf per month.

Attributes like proximity to good schools, MRT stations and other facilities will always stand investors who are chasing good rental yields in good stead, said Mr Koh.

But predicting how rental yields will pan out over the next few quarters is difficult because there are several big unknowns.

Analysts say the fluidity of the property market means some investment decisions may change over time, making it tricky to pinpoint exactly how many properties will come up for rent.

‘Investors may get an apartment with the intention to flip it, but if they can’t sell it at the price they want they’ll rent it out instead,’ said Mr Colin Tan, head of research at Chesterton Suntec International.

He pointed out that property prices could be close to or at their peak, and that there is uncertainty over how long low interest rates will last.

‘Risk levels remain high, but if all the factors work out in their favour, the returns for these investors will be good,’ he said.

Source: Straits Times, 20th 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

Interest rates set to stay low but market volatility is ‘double-edged sword’

FEARS that interest rates will rise and stifle the local housing market have all but disappeared amid the unfolding global stock market turbulence.

In a bid to stabilise markets, the United States Federal Reserve this week vowed to keep US interest rates at historic lows for at least two more years.

But property buyers are taking a cautious attitude nevertheless, and are expected to wait to see how the stock market chaos plays out.

Experts say the volatility has presented a double-edged sword that could fall either way.

The low US rates are set to keep local rates at rock-bottom levels and bolster the housing market, but the recent wild stock market swings are likely to spook some property buyers, experts say.

Further blurring the picture – and analysts’ expectations – is a possible fresh financial stimulus in the form of a third round of US ‘quantitative easing’, which amounts to printing more money.

This could send more cash flowing into the region, including Singapore and its property sector.

The prospect of low rates for at least two more years was timely. Before that, fears had emerged that the end of the second round of US quantitative easing in June could have meant higher interest rates – belting the housing market.

With that fear seemingly on hold for two years, and on the back of a strengthening Singdollar, key local money market rates have responded by heading down.

The three-month swap offer rate, for example, plunged into negative territory to -0.0119 per cent for the first time on Wednesday. With some mortgages pegged to this benchmark, experts say affected home loan rates might fall between zero and 0.6 per cent.

Brokerage Kim Eng said yesterday low interest rates could keep demand for homes fairly strong, with owner-occupiers likely to be the key driver.

‘And with global stock markets heading into bear territory, it may prompt more investments in property in this part of the world as investors also seek to hedge against inflation,’ it added.

‘On a normalised basis, we still expect an average of 1,000 new private residential units being sold per month.’

But interest rates are only part of the housing equation. There have been several warnings of an impending glut while stock market volatility and the global economic storm could dent confidence.

In 2008 when stock markets dived at the start of the global financial crisis, home sales plummeted almost 70 per cent to just 118 units sold that October.

Experts say, however, it is too early to tell how the current crisis will play out. It could be just a short-term blip or a longer-term correction that will chill the property market.

But buyers are likely to keep their heads down for the next few weeks.

Still, 100 units have been sold at 493-unit Boathouse Residences in Serangoon at an average $880 per sq ft in the past week since a soft launch.

Mr Elson Poo, assistant general manager (sales and marketing) of its developer Frasers Centrepoint Homes, said: ‘The more popular (unit types at Boathouse) are the bigger ones which appeal to owner-occupiers. Investors, on the other hand, are on the sidelines, watching to see how the global economic development pans out before making a decision.’

Global Property Strategic Alliance chief executive Jeffrey Hong said demand, even for suburban homes, might be ‘stagnant’ for a while as buyers await clearer signs of the market’s direction.

Mr Hong noted that the suburban segment – where many buyers are owner-occupiers or HDB upgraders – is likely to be less affected than high-end homes, which often attract investors.

UOL president Liam Wee Sin said concerns remain over the faltering US and European economies but added it was too early to tell how stock market volatility might affect property sentiment.

He noted that low interest rates, ample funds and a strengthening Singdollar all boded well for the market although he expects sales and prices to moderate.

‘There are different segments of buyers. Foreigner purchases, for example, may continue unabated as the strengthening Singdollar might make residential properties here a relatively safer asset to invest in compared to the volatile stock market,’ added Mr Liam.

Property investor Sameer Aswani, a 35-year-old businessman, said the Singapore market is still fundamentally sound despite the shaky global economy.

‘Interest rates are at an all-time low so if a good opportunity arises, I will still go ahead with a home purchase,’ he added. ‘At most, I see the market correcting slightly but of course in the light of the uncertainty now I’ll be more cautious.’

Source: Straits Times, 13th Aug 2011