About 80% of buyers for the 134 units sold to date are Singaporeans

CAPITALAND has sold another 24 apartments over the weekend at The Wharf Residence at Tong Watt Road, off Mohamed Sultan Road, the listed property group said in a release yesterday.

This comes after the sale of 85 apartments on Friday following a relaunch of the 999-year-leasehold project.
The apartments are priced at between $1,300 and $1,600 per square foot (psf) inclusive of a package comprising stamp duty absorption and an interest absorption scheme.

Buyers who do not opt for this package will enjoy an 8 per cent discount.
Last year, CapitaLand priced apartments in the development at $1,500 to $1,900 psf, again inclusive of the stamp duty/interest absorption package.

However, buyers were not given the choice of not opting for this package.

With the latest sales achieved up to 4pm yesterday, CapitaLand has sold 134 of the total 173 apartments in the project.

About 80 per cent of buyers for the 134 units sold to date are Singaporeans.

The rest are from Indonesia, Malaysia, China, Japan, Canada and Vietnam, said CapitaLand Residential Singapore CEO Patricia Chia.

The apartments comprise two to four-bedroom units ranging from 1,012 to 2,196 square feet, as well as five penthouses (2,745 to 5,565 sq ft).

The development also includes 13 conserved shophouses, dubbed the Vintage Collection houses, ranging from 4,478 to 4,930 sq ft in strata area.

Ms Chia said CapitaLand has received queries for the conserved houses and will launch them for sale soon.

Source: Business Times, 18 May 2009

KOH Brothers Group hopes to tempt HDB upgraders with the release of a small Kovan project this weekend while it holds off launching high-end properties until the time is ripe.

The freehold Fiorenza in Florence Road has 28 units and will be priced at $790 per sq ft, or between $749,000 and $1.2 million per unit.

There are two- and three-bedroom units ranging from 840 to 1,442 sq ft in the five-storey block as well as penthouses of 1,378 to 1,851 sq ft each.

In the same area, the 521-unit Kovan Residences, which is nearer the Kovan MRT station than Fiorenza, still has unlaunched units. The 99-year leasehold project went for about $880 psf last year but those levels have since been cut. Last month, 56 units were sold at a median price of $705 psf.
Koh Brothers is offering the interest absorption scheme at a 2 per cent premium for Fiorenza.

Chief executive and managing director Francis Koh said the project would feature a glass jacuzzi imported from Italy on all the balconies. Each unit will also get a multi-room digital music system.

Koh Brothers had planned to release Fiorenza in the second quarter of last year. It was also hoping to launch the high-end Lincoln Suites off Newton Road by early this year, but the market has not been in its favour.

With high-end demand still muted, the launch is unlikely anytime soon.

Mr Koh said the consortium would continue to lease out Lincoln Lodge – which is the site for Lincoln Suites – right into next year. It had, together with Heeton Holdings, KSH Holdings and Lian Beng Group, bought Lincoln Lodge at the height of the property boom in 2007 for $1,449.30 psf per plot ratio.

Koh Brothers has other development projects in the pipeline which it is holding until an appropriate time.

‘The market may change very quickly. It can go up quickly, it can also come down quickly,’ said Mr Koh.Source: Straits Times, 24 April 2009

This takes total sales since the official launch to 170 units

CITY Developments Ltd (CDL) sold 20 units at The Arte at Thomson over the weekend. This takes total sales since the property’s official launch to 170 units, with last weekend’s sales fetching a total of $30 million.

‘The sales volume indicates that buyers have greater confidence in the property market and in the future of their investment. This reinforces CDL’s view that the current market is now attracting savvy but cautious investors,’ said Chia Ngiang Hong, Group general manager of CDL.A majority of buyers of The Arte have private home addresses and many say they want to invest in another property or to move into a new and upscale residence.

Singaporeans’ renewed interest in private property saw the sales of 2,660 private homes in the first three months of 2009, which is about 62 per cent of total new home sales in 2008, according to the CDL release.

Source: Business Times, 21 April 2009

Buyers’ interest was also evidenced by the strong turnover of over 1,000 visitors at The Arte’s showroom over the weekend.

Among other factors, these prospective buyers were drawn by the property’s location and proximity to a MRT station, according to a CDL release.

The Arte is located within the Thomson area with convenient connections to the City and the expressways. It is also a short walk from Toa Payoh MRT station.

Priced at $880 psf on average, the freehold project comprises two 36-storey towers and will be completed in 2012. Most of the 336 units available are going for under $2 million.

Buyers can opt for CDL’s interest absorption scheme (IAS), which allows them to defer the bulk of their purchase until The Arte’s completion on the condition that they take up a housing loan at the point of sale.

THE buzz continues at property launches on the island. City Developments said yesterday that it achieved about $190 million of sales from selling about 150 units at The Arte at Thomson since March 21.

The freehold project is priced at $880 psf on average. No premium is being being charged for an interest absorption scheme (IAS) that CDL has extended to buyers. The scheme means buyers pay just the initial 20 per cent to CDL and defer paying the bulk of their purchase price until The Arte is completed. However, buyers have to take up a housing loan at the point of purchase.

CDL has released 180 of the total 336 units in the project, which comprises two 36-storey high towers.

The majority of The Arte’s buyers have private home addresses. Most of the units are going for under $2 million.

Over at Holland Road, Bukit Sembawang is releasing more units at its freehold Verdure from today. It has sold 14 of the 34 apartments in the five-storey project released last weekend. Verdure comprises 69 apartments, with an average price of about $1,350 psf, and six strata semi-detached homes, which cost about $4.8 million on average.

Bukit Sembawang had previously offered an IAS without charging any premium, but from today, buyers will have to pay 2 per cent more to benefit from the IAS.

Over at Tembeling Road in the Katong area, Alpha Land International is offering a small development with a total of 12 apartments. Prices in the five-storey freehold project, which is expected to be completed towards the end of this year or early next year, range from $663,840 (for an 818 sq ft two-bedroom unit) to $1.64 million (for a 2,379 sq ft four-bedder penthouse).

Alpha Land is offering an early bird discount in the form of renovation packages ranging from $10,000 to $25,000, depending on the size of the units. Tembeling Court is being marketed by Texan Associates.

Sim Lian Group will also launch its 360-unit HDB project Parc Lumiere tomorrow. Offered under HDB’s design, build and sell scheme, units in the Simei development have an average selling price of $425 psf. Parc Lumiere has four and five-room flats, with four-room flats selling for $378,000-$425,000 and five-room flats going for $462,000-$575,000. Source: Business Times, 17 April 2009

CHUA CHOR HOON and LIM HUI LING compare the current situation with past downturns to gauge where we stand today in terms of oversupply and time to recovery

WITH the economic downturn, the residential market landscape has changed as developers shrink the size of units and offer steeper discounts to lure cautious buyers while banks tighten credit. So how will this downturn play out?

We compare the current situation, particularly in the mass market segment, with past downturns to gauge how prices are likely to perform and when recovery will be in sight.

The mass market segment has proved to be less volatile than homes located in the prime districts of 9, 10 and 11 – on the way up as well as on the way down.
While average prices of luxury homes rose 66 per cent during the property bull run in 2007, average prices of three-bedroom leasehold homes outside the prime districts only rose 27 per cent.

Gentler declines
Similarly, on the way down, mass market homes have seen gentler declines compared with higher-end condos. Last year, prices of luxury homes fell 30 per cent while average prices of non-landed three-bedroom leasehold homes outside the prime districts fell just 8 per cent to $560 per square foot as at end-2008.

The average prices of homes outside prime districts as at end-2008 are 33 per cent higher than the trough prices in 1998 and 27 per cent higher than the trough prices in 2003. However, they are 25 per cent lower than the peak in 1996 and 11 per cent lower than the peak in 2000.

However, the overall housing supply is much less compared with the level in 1998 which saw a supply glut in the public housing market. Around 31,600 public housing flats were completed each year between 1996 and 2000 compared with about 5,000 units completed annually in the last five years. To avoid over-building of flats, the Housing Development Board (HDB) had put in place the build-to-order (BTO) system in 2001 to provide the main supply of new flats.

Under the BTO system, construction will only start when a majority of the units have been booked and buyers would have to wait three to four years for the flats to be completed. HDB’s stock of unsold inventory is now estimated to be at a record low of under 1,000 units. Hence, the limited supply of new HDB flats will provide some support for the public housing resale market. This, in turn, should help hold up prices of mass market private homes.

The strong demand in the HDB resale market is closing the price gap between HDB flats and non-landed private homes, especially those in the suburban areas. However, there is room for the price gap to narrow further based on historical trends.

The price premium of private homes over HDB flats rose sharply in 2007 to unsustainable levels and will narrow as the private property market declines more steeply than the public housing market. Prices of HDB resale flats are likely to decline as the economy contracts further. The moderating rate of increase in the HDB resale price index and declining demand in Q4 2008 are signs of a weakening HDB resale market. Some HDB resale flats have already transacted below valuation this year. In this bearish scenario, private property prices would be further depressed. In Q1 2009, developers have already cut prices of new leasehold projects by 5-10 per cent.

So how long will this downturn last? The previous downturns lasted 2.5 to five years. While the property market saw a quick recovery after the 1998 Asian financial crisis, the recovery was slow after the 2001 Internet bubble burst, being compounded by a spate of adversities – the Sept 11, 2001 terrorist attacks, the Iraq war in 2003 and the Sars epidemic in 2003. The current downturn in the private residential market started only four quarters ago and is unlikely to bottom this year as the economic outlook is deteriorating. As to the timing and speed of the market’s recovery, that will hinge on the economic recovery of the major developed nations.

Going forward, developers are expected to resize the units of developments that have yet to be launched to make them more affordable. This would be aided by declining construction costs which would lower total development costs.

Purchases under IAS
Developers continue to offer an interest absorption scheme (IAS) which is similar to the deferred payment scheme (DPS). Under the IAS, buyers sign up for a loan with a bank but won’t have to fork out any cash other than the 20 per cent downpayment until the project gets its Temporary Occupation Permit (TOP). Although buyers may find it attractive not to have to make any progressive payment or service a loan before TOP, they should be aware that they may have to pay a premium of around 3 per cent under the IAS.

In addition, they would usually be locked into the loan for two years under the scheme. So complications could arise should they need to sell their property within the lock-in period.
Meanwhile, those shopping around for a property now should keep this checklist in mind:

• Purpose (whether it is for own stay or investment)
• Holding period
• Budget
• Preferred location
• Surrounding environment
• Proximity to workplace, school and amenities
• Accessibility to expressways and public transport nodes
• Rental yield/resale value (especially for investment)
• Reputation of the developer
• Design of building and unit layout.

While one naturally prefers to buy at the bottom of the cycle, this is harder to do with property than with stocks as each unit and project is different. The unit you want may not be up for sale when prices are at their lowest.

And there are a range of personal decisions that cannot be perfectly timed with the market cycle. For instance, newly married couples setting up home, parents moving closer to their children’s schools, foreigners buying for their children who are studying in Singapore, etc. In addition, a home buyer with a longer holding period is more prepared to ride out the down cycle.

A home buyer should work out his budget to ascertain if he can afford to service the mortgage even in the worst-case scenario. A general guide is that the monthly mortgage payment should not be more than 40 per cent of monthly household income. But in these uncertain times, it would be more prudent to consider a lower monthly mortgage service ratio. The key at this point is to buy within one’s means.

Chua Chor Hoon is senior research director, DTZ; Lim Hui Ling is senior research analyst, DTZ

Source: Business Times, 26 Mar 2009