BUYERS of non-subsidised HDB resale flats must now occupy their flats for at least three years before they can sell, under new rules unveiled yesterday.

This is up from 2-1/2 years for buyers with HDB loans and one year for buyers with bank loans or no loan.

The move, effective yesterday, is seen as a government effort to curb speculative buying and selling of public housing.

Home hunters have expressed dismay in recent months that speculators may be pushing up HDB resale flat prices.

Property consultants said the move is set to nip speculation in the bud but is not likely to result in lower flat prices.

The move comes after an HDB study found that a growing number of flat owners were selling flats within three years.

In late January, National Development Minister Mah Bow Tan flagged a review by HDB of its rules, with a view to stamping out possible speculation.

In Parliament yesterday, Mr Mah said said more flat owners had been selling flats as soon as the minimum period was up, although the numbers were not large.

He added: ‘However, if the trend continues, buyers who genuinely need housing could be crowded out.’

He was responding to MP Ang Mong Seng’s request for a review of the one-year minimum period applying to those with bank loans or no loan.

‘HDB flats are provided primarily for owner-occupation and not speculative profit or rental return,’ said Mr Mah.

HDB said in a statement that the change meant demand would more accurately reflect interest from buyers who wish to occupy flats.

Different rules apply to subsidised buyers who receive HDB grants.

Home hunter Sofian Buang, 33, a loading officer, said: ‘My biggest concern is getting a roof for my family, now that I have a daughter. I am looking for a resale flat to settle in, not to sell or to rent out.’

ERA Asia-Pacific associate director Eugene Lim said the change would remove buyers who wanted to flip HDB flats after a year. ‘With a smaller group chasing after HDB resale flats, price increases will slow down,’ he said.

Demand for resale flats outweighs supply so prices will still rise, but perhaps at a slower pace, said C&H Realty managing director Albert Lu.

Mr Steven Tan, executive director of OrangeTee’s residential division, said the change would cut speculation but that the Government should look at private property owners buying HDB flats to rent out right away.

If demand is growing and fewer people choose to sell because they want to lease their flats out, prices will rise, he said.

Mr Mah said that of the 682,000 flats that are eligible for subletting, only 3 per cent are sublet, suggesting that most flat owners are buying their flats for occupation, and not rental.

Amid concerns of runaway HDB prices, other MPs yesterday raised questions, including a possible ban on some buyers.

‘There is a populist suggestion that we should ban private property owners from buying HDB flats,’ said Mr Mah. But if the Government did so, what about HDB owners buying private property, he said.

Most resale flat buyers are citizens who do not own any private property, he said, adding that there was no evidence that specific buyer groups, like PRs and private property owners, were driving up prices.

He said buyers who did not want to pay very high prices could walk away.

Some other key changes unveiled yesterday include allowing upgraders and those who downsize to apply for a second concessionary HDB loan. This could push up resale activity for smaller flats in the resale market, said PropNex chief executive Mohamed Ismail.

The HDB study found that last year, 9 per cent or nearly one in 10 resale flats sold had been owned for under three years. Between 2005 and 2007, the figure was just 6 per cent of sales.

Source: Straits Times, 6 Mar 2010

It will now include people who have owned four-room or bigger flats. Previously, the scheme was restricted to those who own three-room or smaller units.

The HDB said in a statement yesterday that although these homeowners would have received substantial proceeds from the sale of their earlier flats, some could still be in need of help. They include those who may have downsized many years ago.

The second group added into the scheme are households with an outstanding mortgage exceeding $5,000 but who would be able to buy an immediate annuity under CPF Life for at least $60,000 with the HDB payout. Previously, the household had to have less than $5,000 outstanding on a home loan.

The changes, which were outlined in Parliament yesterday, kick in on April 1.

They will make 3,800 more elderly households living in three-room or smaller flats eligible for the scheme, said HDB.

This will bring the total number of eligible households to 34,800 – which is 82 per cent of elderly households in three-room and smaller flats.

The Lease Buyback Scheme started in March last year and helps the elderly sell their HDB flats to the Government for cash. HDB buys back the tail-end of a flat lease at market valuation, leaving a 30-year lease for the household.

For example, if a flat has 70 years left on the lease, HDB buys 40 years of the lease from the owner at market rate with the cash going into a CPF Life annuity in the owner’s name. He receives a monthly income stream for life.

To be eligible, a home owner must be 62 or over, own a three-room or smaller flat, have enjoyed only one housing subsidy and must have lived in the flat for at least five years. The household must also not have owned or currently own a private home and must not have a monthly household income exceeding $3,000.

Ang Mo Kio GRC MP Lee Bee Wah hopes to see the scheme extended to elderly households currently living in four-room flats.

Source: Straits Times, 6 Mar 2010

Homebuyers will also be made to dip into their own pockets first before reaching for a loan, with HDB reducing the amount of the second concessionary loans it grants.

Under changes announced yesterday, buyers who move down to smaller flats or to the same type of flat will find it much easier to get the loan.

In the past, second concessionary loans were granted to downgraders only on a case-by-case basis.

The more liberal policy announced by National Development Minister Mah Bow Tan yesterday will help Singaporeans right-size to a home they can sustain over the long-term, to encourage financial prudence.

Mr Mah added that restricting the loan for upgrading might drive households to upgrade even if it were not a prudent move.

‘With greater economic volatility, the flexibility to right-size will be more important… But I hope residents will take that second loan carefully and cautiously,’ he said.

HDB buyers who have sold private properties will remain ineligible for a second concessionary loan.

Many Members of Parliament have been calling for this change for some years.

The HDB said that the change will benefit families which need to right-size to smaller flats but which lack sufficient proceeds from the sale of their existing flats.

It will also be less generous with the way second concessionary loan amounts are awarded.

The loan will be reduced by a homebuyer’s full CPF balance and part of the cash proceeds from the sale of the first flat in an effort to further ensure financial prudence.

But the household can retain at least half of the cash proceeds, or $25,000 in cash, whichever is greater.

The right-sizing of loan amounts will ensure that flat buyers do not take a larger than necessary concessionary loan, reducing the likelihood of subsequent mortgage arrears, the HDB said.

‘(These changes) will help homebuyers manage their finances for their flat purchase upstream, and avoid financial difficulties downstream,’ Mr Mah added.

PropNex chief executive Mohamed Ismail said the changes would allow homeowners to unlock the capital appreciation of their homes over the past three years and to reorganise their finances.

Source: Straits Times, 6 Mar 2010

The new quotas announced yesterday will be set at 5 per cent of flats for Housing Board (HDB) neighbourhoods and 8 per cent for blocks.

Malaysian PRs are excluded from the curbs because of their close historical and cultural ties to Singapore.

The Government has also sharpened the differentiation in housing benefits enjoyed by citizens and PRs.

Under existing rules, all Singaporean couples and couples where a citizen is married to a PR can buy new flats at subsidised prices or apply for housing grants for resale flats.

With immediate effect, a citizen-PR couple will have to pay a $10,000 premium for new flats launched by the HDB.

Citizenship incentive

They will also get $10,000 less in housing grants if they buy a resale home.

But the amount will be restored if the PR family member becomes a citizen or the couple has a child who is a citizen.

National Development Minister Mah Bow Tan, who unveiled the measures yesterday, told Parliament that the changes were to ‘provide an incentive for PRs to take up citizenship… and also reinforce the principle that Singaporeans are our priority’.

Several MPs also raised concerns yesterday about the presence of foreigners in HDB estates.

West Coast GRC MP Cedric Foo noted that property agents have already observed trends that show PRs from Myanmar favouring Jurong West while Filipino PRs are buying at Bukit Panjang.

Mr Mah said the new quota policy will contribute to integrating locals and migrants: ‘Even though PR enclaves are not a problem today, we should put precautionary measures in place early. Otherwise, it might be difficult to unravel problems later.’

PRs comprise about 14 per cent of the population living in HDB flats, according to 2009 figures.

PR families own only 5 per cent of HDB flats; however, there are western and northern towns where this proportion is slightly higher than the 5 per cent average, said Mr Mah.

The HDB said yesterday that 13 out of 162 neighbourhoods islandwide, in towns such as Choa Chu Kang, Bukit Batok, Jurong West and Sengkang, are likely to be affected by the new quota.

The new limits for PRs will apply in addition to the existing Ethnic Integration Policy (EIP), which sets ratios for ethnic groups to ensure a balanced mix in housing estates.

In line with demographic shifts, Mr Mah said the HDB will raise the limit for the category of ‘Indian and Others’ under the EIP from the current 10 and 13 per cent for neighbourhood and blocks, to 12 and 15 per cent respectively.

The Government’s move comes amid rising anxiety among local residents about the impact that PRs have on the public housing market and social environment.

This was reflected in comments made by MPs yesterday in the Budget debate.

Mr Mah explained that ‘there is no evidence that specific buyer groups, like PRs and private property owners, are driving up prices’.

As a proportion of buyers, the number of such buyers remains small, he said.

Mr Colin Tan, director of property consultancy Chesterton International, said that PRs have a slight impact but are not the real reason why HDB resale flat prices are rising.

‘This is due to shortage in supply amid higher-than-expected demand,’ he said.

The impact of the new quota could see demand for HDB flats spread more evenly throughout estates and so moderate price rises, he added.

Residents told The Straits Times that they had mixed reactions to the move.

Mr Khoo Sze Wee, 25, of Jurong West said ‘the PR’s loss in ability to get housing will definitely be our gain. But they shouldn’t be entirely denied housing opportunities’.

PR Lim Bee Lian, 49, felt the new move would restrict housing choices: ‘PRs who have the ability to buy their own flats should be allowed to buy.’

Source: Straits Times, 6 Mar 2010

The Board also agreed to make a much campaigned-for change: it will now allow buyers to take a second concessionary loan from HDB even if they downsize to a smaller flat or move to a flat of the same size. Previously, only upgraders qualified for a second concessionary loan.

Announcing these and other measures in Parliament yesterday, National Development Minister Mah Bow Tan noted that public housing is an especially hot issue this year.

‘Someone asked me recently if I was feeling the heat and I don’t think he was talking about the weather,’ Mr Mah quipped, beginning his reply after a slew of questions from Members of Parliament (MPs).

Many MPs were concerned that some buyers were using HDB flats to speculate in the property market and driving up prices in the process. HDB resale prices hit a new high in Q4 2009, with prices climbing 3.9 per cent from the previous quarter. The median cash-over-valuation (COV) for all resale transactions doubled to $24,000 in Q4 from $12,000 in Q3.

Data from HDB shows that the proportion of flat owners who sell their units within three years of purchase rose to 8.9 per cent for the first 10 months of last year. And in 2008, 7.9 per cent of buyers sold their units within three years. In comparison, less than 7 per cent of buyers sold their flats within three years from 2005 to 2007.

To reduce the number of people using HDB flats to speculate in the property market, the time that buyers are required to stay in their flats before reselling them (minimum occupation period or MOP) will be increased to three years for all flats bought in the resale market. Currently, the MOP is 2.5 years for buyers who choose to take up an HDB concessionary loan and just one year for buyers who either take a commercial bank loan or do not take any loan.

‘I want to emphasise that HDB flats are provided primarily for owner-occupation and not speculative profit or rental return,’ said Mr Mah.

The decision to remove the upgrading condition for the second concessionary loan, in comparison, is to encourage greater financial prudence and flexibility among homeowners. Feedback from MPs said that by providing the second concessionary loan only to upgraders, some might inadvertently be driven to upgrade even though it may not be prudent to do so.

‘Since we are now seeing a situation of greater economic volatility, the flexibility to right-size will become more important,’ said Mr Mah.

But the new policy comes with strings attached. Currently, cash sales proceeds from the sale of a flat need not be used for the purchase of the next one. But with the change, sellers can only keep the greater of $25,000 or half of the cash proceeds. The remaining cash and CPF balance has to be used to finance the purchase of the next flat if they take up a HDB concessionary loan.

The lifting of the upgrading condition is expected to benefit about 1,000 households a year. Currently, HDB grants about 4,000 second concessionary loans each year, mostly to households upgrading to bigger flats.

Social impacts

HDB also said that 3,800 more elderly lessees will now benefit from its lease buyback scheme which has been revised. The scheme allows the elderly to monetise their flats by selling the tail end of the flat’s lease back to HDB.

Other measures are calculated to have social impacts. To encourage permanent residents (PRs) to take up citizenship, HDB will withhold $10,000 of the subsidies for a household made up of one citizen and one PR when they buy a HDB flat. Once the PR converts to citizenship, or when the couple has a Singapore citizen child, the Board will return the withheld subsidy.

‘These measures will give greater assurance to citizens that they are our priority, and at the same time, encourage our PRs to view citizenship more favourably,’ Mr Mah said.

A quota cap for PR households of 8 per cent in each block and 5 per cent within each neighbourhood was also announced. It will be applied on top of the ethnic integration policy (EIP) but will not apply to Malaysian PRs. The EIP was also tweaked slightly. In line with demographic shifts, the Indian/Others limit was raised from 10 per cent and 13 per cent at the neighbourhood and block levels to 12 per cent and 15 per cent respectively.

Property analysts said that the revision of the MOP to three years and the removal of the upgrading condition will affect the HDB market.

‘By standardising the MOP at three years, the ‘turnover’ rate is slowed down from one year to three years. This has the effect of preventing ‘flippers’ from pushing up resale prices with their short-term objectives,’ said Eugene Lim, associate director for ERA Asia Pacific.

But PropNex chief executive Mohamed Ismail said that there will be little impact from this policy which will, at most, just encourage buyers to adopt a mid-to-long term view when buying their flat. He feels that the most notable measure was the extension of the second HDB concessionary loan to downgraders.

‘We may see an increase in market activity due to an increase in downgraders,’ Mr Mohamed said. But he declined to predict if there will be an increase in resale flat prices as it is ‘too soon’ to assess the impact.

Noted Mr Lim: ‘With this change in policy, Singapore citizen households are likely to be attracted to take loans from HDB, leaving only PR households to take bank loans. Banks may now have to re-package their loans more attractively as they battle for market share.’

ERA has a 41 per cent share of the resale HDB market and based on its transactions, some 50 per cent of buyers use bank loans, another 40 per cent get loans from HDB and 10 per cent pay for their flats using cash.

Source: Business Times, 6 Mar 2010

The Monetary Authority of Singapore and JTC Corp – the government agency developing and marketing the project in Nepal Hill – quietly asked hedge fund managers in January to visit the district’s so-called black-and-white bungalows, named for their white-washed walls and dark timber frames, according to a copy of the invitation obtained by Bloomberg News.

Singapore is seeking to attract firms planning to expand in the region as Asia leads the global economic recovery and the US and Europe increase regulation. The proposed cluster follows tax and regulatory incentives that have made it easier for funds to set up shop on the island than in Asian cities such as Hong Kong and Tokyo, helping the industry grow from near zero in 1997 to almost 140 firms today.

Aisling Analytics Pte will ‘certainly look at it as a potential location’ when its lease at Suntec City, next to the central business district, comes up for renewal, said Michael Coleman, the hedge-fund firm’s managing director.

‘I’ve visited and think it’s a very interesting development and a great alternative to a traditional office,’ he said. ‘You’re surrounded by greenery, have your own garden to enjoy and the area is rapidly developing.’

The downside is that it’s ‘off the beaten track’ for investors used to meeting in Singapore’s main office districts, Mr Coleman said. Aisling manages the US$1.6 billion Merchant Commodity Fund and the Merchant Equity Fund.

Rents in Singapore, the most expensive in Asia after Tokyo and Hong Kong, fell 46 per cent, on average, in the fourth quarter, the steepest decline in the region from a year earlier, according to Boston-based commercial real estate company Colliers International. The average top-grade office monthly rental in Singapore’s central business district fell to an average of $6.29 (US$4.50) per square foot in the last quarter, Colliers said in a report last month.

JTC could lure managers by making rents at Nepal Hill ‘very attractive, at least at the beginning’, said Stephane Pizzo, who set up his hedge-fund investing firm, Lotus Peak Capital, last year. He said that he has yet to view the proposed enclave because the space offered was ‘too large’ for his business. He currently works from a refurbished shophouse in Chinatown where more than half a dozen Italian restaurants are within walking distance of his office.

‘The hub idea on paper is great, but it needs to be encouraged,’ Mr Pizzo said. ‘The more people and incentives to move there, the better.’

Nepal Hill is part of a development called ‘one-north’, referring to Singapore’s location one degree north of the equator, that is already home to industry clusters including Singapore’s biomedical research hub, Biopolis. The 180-hectare area will be developed in stages within the next 20 years, JTC said in the invitation to managers.

The bungalows, which formerly housed British army personnel and their families, are remnants of Singapore’s history under British colonial rule. The proposed enclave is across the road from the Rochester Park dining hub, where restaurants such as Min Jiang, which serves Szechuan cuisine, and bars including Da Paolo Bistro Bar are also housed in colonial bungalows.

The island-state’s hedge fund industry has grown to 138 single-strategy hedge-fund managers employing more than 800 professionals from near zero in 1997, according to a survey by the local chapter of the Alternative Investment Management Association.

The industry oversees at least US$34.9 billion, excluding assets managed by several of the large global firms, it said, making it Asia’s second biggest behind Hong Kong.

Source: Business Times, 6 Mar 2010

The new Citadines Kyoto Karasuma-Gojo comes a year after the launch of Ascott’s Citadines Tokyo Shinjuku in March 2009.

Lee Chee Koon, Ascott’s managing director for North Asia, said that that property has achieved strong average occupancy of around 80 per cent. ‘It has also received many positive reviews from customers. Hence, we’re expanding our Citadines brand to another key city in Japan.’

The 124-unit Citadines Kyoto Karasuma-Gojo offers studio and one-bedroom apartments with contemporary decor, modern fittings, a fully-equipped kitchen, a home entertainment system and broadband Internet access.

It is located in Gojo, a short walk from the city’s business district and tourist belt where there are many shopping malls, supermarkets, restaurants and entertainment facilities. Renowned Unesco World Heritage sites the Kiyomizu Temple and Toji Temple are less than a 10-minute drive away.

The property is also near Gojo subway station. And Kyoto’s largest downtown shopping area, Shijo Street, and the Kyoto Shinkansen bullet train station are just one stop away. Shijo Street has a wide range of shops, from traditional craft outlets to boutiques carrying designer fashion.

Ascott said its latest property will cater to strong demand for quality accommodation in Kyoto, which is a popular tourist destination and a venue for international conventions.

With this project, Ascott’s portfolio in Japan will increase to over 3,800 apartment units in 53 properties across 10 cities including Tokyo, Kyoto, Osaka, Nagoya, Kobe and Hiroshima.

Source: Business Times, 6 Mar 2010

In particular, Reits in Singapore (S-Reits) look like they are making better progress in resuming growth, compared with their counterparts in the region.

This year could also bode well for new Reit listings. ‘2010 will probably see the resumption of the initial public offering (IPO) market for Reits,’ reckoned CBRE Research Asia executive director Andrew Ness.

In H2 2009, the total market capitalisation of Asian Reits rose 17.6 per cent, the property consultancy said. Most Reits in the region managed to emerge from the credit crisis relatively unscathed, having raised funds from rights issues or rolled over their debts.

But some Reit markets went through a greater shake-up than others. In Japan, consolidation became the order of the day as four cases of mergers took place. One of these involved the merger of Advance Residence Investment and Nippon Residential Investment, as the latter’s sponsor went bankrupt.

Reits in Singapore and Hong Kong managed to withstand the storm better, even outperforming the main stock indexes in their markets. Between July and December last year, the FTSE ST Reits Index rose some 38 per cent.

‘Generally well managed by professional managers, S-Reits are unlikely to go under,’ CBRE said. ‘While their price movements can be volatile, S-Reits are considered a fairly safe haven in the long term.’

Although stock market conditions in Asia improved in the second half of last year, they were not attractive enough for most sponsors to set up and list a Reit. Just four new real estate funds went public in Thailand, according to CBRE.

But listing activity could return this year – there could be several new S-Reit listings in the pipeline, CBRE said.

Cache Logistics Trust is one that is due to go public soon. ARA Asset Management partnered logistics firm CWT to set it up, and the authorities have given the nod for listing. The Reit will start with six properties worth about $730 million in its portfolio.

ARA also said in December last year that it is working with Regency Group to list a Syariah-compliant Reit in Singapore. The Reit could be listed in the second half of this year and could hold some $1 billion worth of properties, largely from the hospitality sector in Qatar.

The market has also been awaiting the IPO of a commercial Reit by Mapletree Investments. The Reit would hold VivoCity shopping mall, among other assets.

Besides Singapore, Thailand could see more property funds going public this year, CBRE said.

Meanwhile, existing Reits could focus on buying assets and growing distributable income. ‘Further acquisitions are likely in the coming year as Asian Reits look to enhance their portfolio quality ahead of the full recovery of the real estate market,’ Mr Ness said.

Already, some S-Reits have been building up their portfolios. Last month, for example, CapitaMall Trust agreed to buy Clarke Quay for $268 million, and Ascendas Reit said that it would buy three properties for $228.5 million.

Source: Business Times, 6 Mar 2010

Senior Minister of State for National Development Grace Fu said it is considering a one-off subsidy for town councils, estimated at $130 million in total.

The amount each will receive will depend partly on the complexity and scale of the lift upgrading project, she said yesterday.

Town councils will be given the details later this year.

They now co-pay the cost of the Lift Upgrading Programme (LUP) to make it more affordable for residents.

While this is well-intended and should be upheld, it must be ensured that this co-payment ‘does not overstrain the town councils’ ability to meet other cyclical works, which are also for the benefit of residents’, said Ms Fu.

She added that even though the Government bears the bulk of the cost of the LUP, at $5.5 billion, town councils still have to co-pay about $360 million in total – not a small sum.

This can pose a ’significant burden’ for some town councils, especially those with a high concentration of flats built in the 1980s, when homes were built to allow greater privacy. These flats will require costlier lift projects.

Ms Fu was answering questions from MPs, such as Mr Ahmad Magad (Pasir-Ris Punggol GRC) and Mr Masagos Zulkifli (Tampines GRC), on the lift upgrading burden on town councils.

She also provided an update on the LUP, saying it was ‘on track’.

The Government has identified more than 90 per cent of the blocks eligible for lift upgrading, and 50 per cent have works completed or ongoing, she said.

The HDB will select the remaining blocks for upgrading over the next two years or so and the whole programme will be completed by 2014, as earlier announced.

Source: Straits Times, 6 Mar 2010

He suggested that the Government, instead of private developers, should continue to build such new centres and markets as this would ensure Singapore remain a liveable and affordable city.

‘If we apply the principle of maximising economic benefit from the land occupied by hawker centres and wet markets, these iconic features of Singapore would become supermarkets and food courts in no time,’ he said.

But Senior Minister of State (National Development) Grace Fu replied that it was not necessarily true that consumers would end up paying a higher price for goods and services.

This is because private operators of such markets and centres need to ensure that what is sold is affordable and relevant to the needs of residents.

She cited the example of Sengkang’s first hawker centre and wet market.

Opened in January and run by the Kopitiam chain, it is the first instance where the Housing Board allowed a stand-alone market and food centre to be developed by a private operator.

She visited the centre and found prices comparable to those at other hawker centres in the neighbourhood. A plate of chicken rice was $3 and coffee cost 90 cents. ‘I don’t think you can call that exorbitant,’ she said.

Having a master tenant meant the Government could hold one person responsible for cleanliness and service standards. Such a tenant could ensure a good mix of tenants and must also be able to convince enough stalls to operate round the clock, providing better services to residents.

Ms Fu noted that, by contrast, a hawker centre in Hougang, which had since been demolished, had a vacancy rate of 34 per cent.

Why was that the case? It was because the National Environment Agency, the authority in charge of hawker centres, does not have a role to micro-manage tenants’ businesses.

A commercial operator, however, ‘will be able to do that and has the incentive to do that’, she said.

Source: Straits Times, 6 Mar 2010