Singapore Property Review

NATIONAL Development Minister Mah Bow Tan yesterday disagreed with suggestions by property tycoon Kwek Leng Beng on the need for the government to review its first-half 2008 land sales programme and rethink its decision to scrap the deferred payment scheme.

Mr Mah said the government can be nimble on state land sales because the programme is reviewed every six months, depending on changes in the market.

But the H1 2008 programme will not be changed midstream, he said. ‘We should be careful of knee-jerk reactions. You can’t adjust it just because something is happening yesterday and then we change things today. We’ve got to take a longer-term view.’

Mr Mah was speaking at a media briefing after he delivered the keynote address at Urban Redevelopment Authority’s Corporate Plan seminar at Grand Copthorne Waterfront Hotel.

In an interview published by BT this week, Mr Kwek had urged the government to review its H1 2008 land sale programme, which was fixed last year when the property market was buoyant compared with today.

On the decision announced in October last year to scrap the deferred payment scheme, Mr Mah said yesterday it was carefully considered, taken ‘after a lot of thought, deliberation’.

‘The objective was two-fold,’ he said. ‘One, to remove excessive speculation from the market. And two, to make sure there is financial prudence - that people make decisions and don’t over-commit themselves.

‘These are two very important objectives and they are still relevant today - in fact, probably more so in today’s kind of market. I don’t see any need for us to change our decision on that.’

Mr Kwek had suggested the deferred payment scheme could be revived, but this time with a higher initial payment of 30 per cent instead of 20 per cent previously. He also said that if a developer wants to extend a deferred payment scheme to a buyer, perhaps the developer’s bank might be in a better position to assess viability, while keeping an eye on prudence.

Mr Kwek also made a suggestion he said could make housing more affordable for young Singaporeans, including singles. The government could build more public housing units and lease them to young first-time buyers with an option to buy the flats within 10 years at fixed prices, he said.

Responding yesterday, Mr Mah said he disagreed with the premise that young couples cannot afford to buy an HDB flat.

‘The average amount of money they need to put up for monthly mortgage payments is well within their means, something like 20 per cent. This is quite affordable,’ he said.

‘If you were to rent, they will probably be paying as much, if not more, in rental, than to buy the flat. It doesn’t make sense to rent when you can buy using your CPF. You rent, you can’t use your CPF.

‘When you buy, you actually buy a place you can call your own. It’s an investment. When you rent, it’s not yours.

‘Our home ownership policy with all the generous housing subsidies that we have given actually allows most Singaporeans, young couples, to be able to buy their own homes.

‘If you look at the numbers, you’ll find that suggestion (by Mr Kwek) does not quite make sense.’

Source : Business Times - 5 Apr 2008

The keynote panel discussion on the first day of the SMART Expo was on the Singapore property market. The title was “Building a Sound Investment Strategy for a Changing Singapore Property Market” and the three panelists were:

• Raymond Chow, CEO & Chairman, Ray Harcourts International Real Estate Group
• Mohamed Ismail Gafoore, CEO, PropNex Realty Pte Ltd
• Alfred Lim, Executive Director, VestAsia Pte Ltd

The facilitator of the panel discussion was Mohamed Ismail, CEO of PropNex and a very dynamic speaker. Property still seemed to be a hot theme as the event was packed with a full house. Here’s a summarised transcript on what they talked about:

With the current changing economy and market sentiment in Singapore, how should buyers react?

Alfred: The fundamentals of Singapore has not changed. But we are not immune to global changes and people have become more defensive. It is best to look for assets that produce yields.

Ismail: Eight months ago, it’s not a buyers market. Sellers call the shots. Now, it’s a buyers market. Sellers are not desperate, but they are more realistic.

Raymond: When good times comes, a lot of owners also become greedy. A lot of good things are happening in Singapore right now. F1, integrated resorts, etc. Unfortunately, we are also affected by US subprime crisis. The speculators are the ones affected. They have to sell cheap.

What’s the emerging opportunity in Singapore for this year?

Ismail: Today, you can still pick up luxury units at 5-8% less than the peak reached less than a year ago. This is especially for units with deferred payment scheme.

Alfred: You can look at fringe location luxury units that are slightly older and are still lagging behind. A lot of these properties have to be absorbed first before we move into the mid-tier market.

Raymond: Two major locations are the Marina Bay area and Sentosa.

Ismail: There’s a limit to the amount of properties in the core area. Moving outside, anything this is central location will benefit. However, do not be so bold as to speculate. You must have the credit ability to finance and look at mid to long term.

What are your views on mass market that are further out?

Alfred: It’s all a function of affordability. If they have good anmenities and transport hub, they should do well. I prefer the fringe area. You also have to differentiate whether a property is for consumption or for investment.

Ismail: If the place is less than 5 minute walk to MRT and you can get there without sweating, it’s a good buy. The mass market will continue to move as there is a difference between the prices of resale market and new developments. However, foreigners will not come in to push the price.

Raymond: One thing you can do is to go to URA center and check out what’s happening in Singapore. Or go to www.ura.gov.sg.

What about landed property?

Raymond: It’s again about demand and supply. There’s a limit of supply. Lifestyle has improved tremendously.

Ismail: If you buy now, you will make money in 8-10 years. Landed property is a scarce commodity in Singapore. The price is very low compared to condominiums. One reason why they have not moved much is because there are not many transactions done. Valuation is actually very simple to do. The valuer will just consider the average prices of recent transactions and the market sentiment.

No panic mood this time round and developers are financially stronger unlike during the Asian crisis, but a lot depends on Singapore’s growth, construction bottlenecks and costs, and investors’ pricing power, writes KALPANA RASHIWALA

AFTER two years of exuberant growth, Singapore’s private housing market has come to a virtual standstill. Property launches and sales have slowed as local buyers adopt a wait-and-see attitude while foreign buyers, including institutional investors, are taking a similar approach in the wake of the sub-prime crisis. Despite a paucity of transactions, prices have not weakened. Ask most industry players and they will say that the fundamentals of the local property market are still intact. Veteran developer Kwek Leng Beng, executive chairman of City Developments, says: ‘Today, the mood is not one of panic, unlike during the Asian financial crisis in 1997. We are not in recession today, but rather, we are the victims of our own success. Because we did not anticipate that our economy would be firing on all cylinders, we have a shortage of almost every type of property today.’

Not only is the Singapore economy still growing, but the remaking of the Singapore story is still intact. Singapore’s transformation into a global city and its evolution into the mother of all hubs - financial/wealth management, tourism, education, healthcare, research & development, etc - are coming along nicely.

That and the development of two integrated resorts with casinos and the Republic hosting the Formula One race have served to boost Singapore’s profile among overseas investors, keen on parking some money in Singapore, including in its property sector.

Most developers appear to be keeping their cool despite the current lack of activity in the property market. After all, the established players have made nice profits in the past couple of years and have strong balance sheets. Most have stopped buying high-end residential sites for some months.

The effective cost of borrowing for developers today is 3-5 per cent, nowhere near the highs of almost 20 per cent seen during the darkest days of the Asian crisis a decade ago.

These days, developers reckon they can hold off new property launches, for some months at least. The strategy is that if they don’t launch projects, then they don’t need to drop prices to entice potential buyers. Thus, developers hope they can keep their hold on pricing.

Analysts say one major factor that could weaken developers’ pricing power is specu-vestors who bought multiple units in projects on deferred payment schemes earlier. The deferred payment schemes typically run out when the projects are completed, which is when buyers have to cough up big instalments. To avoid facing such a situation, and be forced to run around town looking for multiple housing loans - which they may or may not get - specu-vestors who bought multiple units may seek to offload their units, at below market prices if necessary, as the projects near completion. If significant numbers of specu-vestors dispose of units at lower than market prices, that may set lower price benchmarks for the overall market.

Another factor that could potentially cause weaker prices could be smaller and newer developers, who may prefer to price their projects more competitively to draw buyers - rather than wait.

Confidence will also hinge on macro factors - for instance, whether Singapore’s economic growth remains in positive territory and employment is secure. Construction bottlenecks and higher construction costs are also eating into developers’ margins.

Already, some private investors are understood to have formed informal ‘consortiums’ among friends, hoping to scoop up some good buys when property prices fall.

Some developers last month were saying the sub-prime crisis could clear by the first half of this year and that things will pick up in the local property market in the second half. Now, that view sounds optimistic, given the ongoing carnage in global financial markets, with no end in sight to the US sub-prime debacle. The staring match between buyers and sellers in the residential property market will continue. Who will blink first?

In the office market, prime office rents nearly doubled last year after rising about 50 per cent in 2006. Despite tight office supply in the immediate term, resistance from occupiers to higher rents is expected to put the brakes on landlords’ ability to achieve steep rental hikes this year. As well, the various projects on 15-year leasehold transitional office sites are expected to be completed within the next 12-15 months and should provide some short-term relief to the office crunch. If major financial institutions scale down their operations in Singapore, demand could take a hit. Post-2010, supply of completed Grade A office space will start increasing again. All these point to more competitive office rentals in Singapore in future.

Investment sales of office blocks have slowed, on the back of tighter bank financing. Even for residential development sites, relatively unseasoned players are finding it tougher to secure funding, because of tighter liquidity brought about by limited appetite in capital markets. With developers sated with prime freehold sites and given weak home sales, the collective sales market has also gone into slumber. Hopefully, there will be fewer en bloc fights among neighbours. Singapore property investment sales this year are expected to come in at about half of last year’s record $54.5 billion, CB Richard Ellis estimates.

All in all, we look set to have a quieter year in the property market. After the heady growth in the past two years, a consolidation will hopefully provide a time for reflection - and for planning the next move.

Source: Business Times - Property 2008 Special (Published 27 Mar 2008)

There are still pockets of new developments in Singapore that are priced below $1,000 per sq ft, writes PETER OW

HOUSE hunting can be challenging at a time when sellers are holding firm despite a quieter property market while buyers are expecting a steeper discount based on weaker sentiment from the US sub-prime woes. Those on a strict budget should note, however, that the record prices were achieved mainly by new launches in the first 10 months of 2007. This is also true in suburban locations as buyers pay more for new developments under construction. Nonetheless, there are still pockets of new developments in selected parts of Singapore that are priced below $1,000 per sq ft such as Bedok and Jurong.

Well, it may be the right time to start looking for a second home as an investment. Given the more cautious economic climate and rising inflation, price naturally becomes the most significant factor for a property purchase as that would have an impact on initial cash outlay and the long-term mortgage financing of the property. Here are seven key tips to note when shopping for a second residential property for investment. Before buying, ask yourself the following questions:

Land scarcity in Singapore should ensure sustainable capital growth in landed housing in the medium to long term, write STEVEN MING and AVIN SEOW

LANDED homes saw their strongest price rise last year since 1994 but they have yet to catch up with their non-landed counterparts, leaving room for more capital as well as rental growth in 2008. Prices of landed homes rose 23.4 per cent last year, going by the Urban Redevelopment Authority’s (URA) index of landed private residential property island-wide. This growth rate reaffirmed the upward trend, especially compared with the negligible growth in previous years - 0.6 per cent in 2004 and 2.4 per cent in 2005.

For landed homes in the suburban areas, average prices rose to $636 per sq ft, an increase of 45.1 per cent year-on-year. Landed homes in the prime districts of 9, 10 and 11 enjoyed healthy capital growth of 24.3 per cent to reach $961 per sq ft in 4Q 2007.

Good Class Bungalows (GCBs) were the star performers in 2007. According to URA numbers, average prices of GCBs surged 58.7 per cent year-on-year to $763 psf from $539 psf in 2006. The average cost of a GCB stood at $13.8 million in 2007, compared to $10.3 million in the preceding year. The trend of some GCBs being sold and resold within 12 to 18 months continued into 2007.

An example of this trend is a GCB at First Avenue that was sold for $10 million in September 2007, only to be resold at $12.5 million in October 2007, and then resold again at $16 million in December 2007. This is a whopping increase of 60 per cent in just four months.

Boasting a unique waterfront lifestyle, new 99-year leasehold homes on Sentosa Cove have redefined luxury landed living since their emergence in 2004. Expatriates and overseas investors have since lent much support to the capital growth in this segment. Average prices climbed 20.8 per cent to $1,463 psf by end-2007.

Another trend which we have observed is the increasing popularity of cluster housing. Since it resurfaced in 2000, this lifestyle concept has become ever more popular, especially among younger home owners and permanent residents. Cluster houses, offering shared facilities, blend the elements of landed property with condominium style living. Known as strata landed housing, these developments may be bungalows, terraced or semi-detached homes. Some developers have added more exclusivity to their projects by including a private swimming pool in each house. Notable launches last year were Dunsfold 18 and 8 @ Stratton in Stratton Green, both of which received good sales response.

There are several reasons for optimism across all landed housing segments this year. We believe that more capital gains can be expected this year since the price index of landed homes remains some 25 per cent below the peak of 2Q 1996. Landed homes have yet to see the sharp price rises of their non-landed counterparts. Emerging from a relatively low base, landed properties may be more appealing to investors this year.

Secondly, landed housing will always be considered a luxury in land scarce Singapore. This inherent scarcity should continue to lend support to the landed housing market. As such, GCBs look poised for yet another good year of capital value growth. It would not be surprising to see average GCB land prices cross $900 psf in 2008, due to the scarcity of such bungalows (there are an estimated 2,500 of them) coupled with the rising transacted prices on Sentosa Cove.

Similarly, landed homes on Sentosa Cove should continue to trend higher. Unlike those on the mainland, these houses have a broader market. There are no restrictions on foreign ownership of landed homes on Sentosa Cove. The continued influx of expatriates, together with the growing appetite of the rich for something unique and exclusive, is likely to fuel prices of these luxurious homes.

Rental yields are an attractive component of property investments, providing landlords with regular and stable income. Landed properties have become increasingly popular with tenants, with rents rising at their fastest pace in seven years. As at 4Q 2007, average rents of terrace houses and semi-detached houses climbed to $1.87 and $2.22 psf per month respectively, up 52 per cent year on year, while rents for detached houses rose by 23 per cent to $3.09 psf per month.

Rental growth is clearly outpacing capital growth for landed homes, and with the expectation that landed home prices will catch up this year, landed properties could offer an investor both healthy rental and capital gains in 2008 and beyond.

Given the above factors, the landed housing market should be able to attain capital gains of 10 to 20 per cent this year, notwithstanding the continued US credit turmoil. Singapore’s property market remains fundamentally sound, backed by a robust job market and an expanding economy. Perhaps the most fundamental fact is the scarcity of land in Singapore which should ensure sustainable capital growth in landed housing in the medium to long term.

Steven Ming is director at Savills Prestige Homes and Avin Seow, analyst, Savills Research & Consultancy.

Source: Business Times (Published 27 Mar 2008)

Related Links:

- Landed house in D11
- Cluster house in D11

New rules can’t prevent fights led by greed but tussles should be less explosive, writes KARAMJIT SINGHTHE year 2007 will go down as the most spectacular in the 13-year history of Singapore’s en bloc market. It was a story of massive fortunes made and lost. A record number of deals changed hands at a frenetic pace. Prices shot through the roof as it was a period when the perception of Singapore’s prospects had changed dramatically and local property prices appeared cheap relative to the major global cities that Singapore started being associated with. Funds and investors from overseas poured in, and developers and local speculators bought feverishly.

To be precise, it was the first half of 2007 that was truly phenomenal for the en bloc market. In just those six months, 58 en bloc deals involving 5,500 owners took place at a staggering value of $10.8 billion. That amount was close to the value of deals in the previous four years put together!

In 2007, several other records were broken too. Farrer Court created history by being the biggest en bloc deal ever sold. It was the first and only transaction to cross $1 billion. The 618 units at Farrer Court also made the largest pool of en bloc sellers to be successful. Fittingly, Singapore’s largest listed developer, CapitaLand, led the consortium that purchased it. They are proposing to build possibly Singapore’s largest condominium project comprising 1,500 units. (The current record stands at just over 1,200 units at Melville Park in Simei.)

The Westwood Apartments deal set the benchmark for being the most expensive residential site traded. It was sold in November 2007 at a land rate of $2,525 psf per plot ratio (ppr) to Malaysian developer YTL Corporation. As an indication of the extent to which prime land rates have surged, just 18 months before Westwood was sold, the nearby Beverly Mai was bought for less than half its rate - at $1,184 psf ppr. If Westwood had been sold 36 months earlier, chances are that it would have fetched only a quarter of the price it secured.

Amid all the exuberance were negative voices raised against en bloc sales, as well as legal tussles between owners and purchasers involved in collective sale developments. There were calls to restrict or ban such sales, especially for projects with heritage or architectural

There were also numerous complaints about how the process was handled, claims of bad faith and the railroading of minority interests. Above all, there were several high-profile legal tussles involving the purchasers, consenting sellers, non-consenting owners, and some owners who had consented but sought ways to rescind their sales agreement.

The vigour with which legal tussles were fought in some cases seemed to be correlated with how quickly property prices shot up after their sales took place. Many relied on technicalities as potential loopholes, while others were simply a case of minority owners being dead set against the sale.

The dissenting voices of the minorities in many en bloc projects - sold or not, irrespective of their motives - created the impression that the en bloc laws that had worked well for eight years needed an overhaul. On one hand, there are certainly areas where the rules could have more clarity. On the other hand, the voices were not totally representative, as the vast majority tend not to be vocal.

Recognising this and balancing various views, the government introduced a new set of laws in October last year that raised the standards on governance and disclosure. At the same time, some redundancies in the application process to the Strata Titles Board (STB) were removed and STB’s powers were enhanced to disregard non-prejudicial technicalities.

The market largely welcomed the new laws. Some, however, wondered if certain new provisions were really needed, like allowing owners who sign a collective sale agreement to withdraw their consent within five days. It also increases costs for en bloc sellers and makes the exercise more long drawn out.

By this time last year, 25 deals had taken place. So far this year, only one small deal has been reported. Such is the extent to which the en bloc market has slowed with the onset of the US sub-prime crisis in August last year. This points to the cyclical nature of such deals.

En bloc sales take place when developers are confident of the market, and the prospects of profits are high. When the outlook is cautious or uncertain as it is now - or worse, bearish - developers refrain from buying land or en bloc sites. Moreover, with tidy gains made in the bull market of the past two years, developers here can afford to sit on their land stock for a while longer until market sentiment improves.

This market lull will remain as long as the mood is cautious or there is no confidence in the health of the market. However, the expected growth in population due to immigration and the withdrawal of housing stock through last year’s en bloc sales mean demand and supply are still out of sync and it could take a while before they find equilibrium again.

Then there is the slew of exciting projects taking shape like the integrated resorts and hosting of the Youth Olympics. This points to latent activity in the Singapore property market.

When the sub-prime cloud clears, demand for land from developers should pick up and en bloc sales will be back on track. Activity in this round is unlikely to mirror 2007, as it would be taking off from a higher price base.

En bloc sales are the main source of prime freehold land. They will continue to play an important role in urban renewal in Singapore as they help revitalise the property market by stimulating demand.

Disputes in such sales are not likely to go away, even with the introduction of the new laws, as no amount of legislation can prevent disagreements or actions led by greed or dishonesty. However, the market is unlikely to see a repeat of the spectacular price rise of 2007 anytime soon. As such, tussles should be less explosive.

Karamjit Singh is the managing director of Credo Real Estate.

Source: Business Times

Comments: 

DreamHomeMaker: With the more challenging landscape of enbloc market, buyers should be more selective in buying such properties. The best bet would be on something that not only has  enbloc potential, but the property should still have it’s appear to be sold in the open market. Examples such as property like Cavenagh Court in District 9. Buyers stand to profit from at least $0.5 mil in the event of an enbloc, yet due to its location being close proximity to MRT, 0.5km away from ACS (a good school in Singapore, only those staying within 1km can get in) and rumours about up-coming shopping complex, such property will have strong open market appeals, casting as safety net to enbloc-investors. This way, if the bet on enbloc fails, investor still can recover cost thru open market. To be even more careful, one should try to look for low-floor and renovated unit. Why? In open-market, high-floor always commands premium, which is not compensated in the event of enbloc (units at the high floor and same size ones at low floor gets the same compensation), so therefore it makes sense to buy as low as possible in anticipation of enbloc. Due to enbloc potential, if one buys an un-renovated unit, one would be less likely willing to spend money to do up the place in fear of wasting the money if enbloc happens. Buying a renovated unit cast a safety for future value in the event enbloc does NOT happen, as a renovated unit usually sells better in the open-market. Yet, buying a renovated unit does not come in high premium as compared to buying a high-floor. This is because the renovated work done has already depreciated during the period in which the owner has stayed in, and has less effect on bank valuations then the premium of a high floor. In a nutshell, the key to successfully enbloc investment TODAY then is to find a enbloc-potential property that has strong open-market appeals due to future developments nearby, and a even smarter move is to find a low-floor renovated unit. This way, if enbloc happens, one gets a win-fall. If enbloc does not happen, one can still enjoy the beautiful renovated unit to stay till next cycle, OR simply sell off to the open-market to recover cost with small profit.

S’poreans buying more private homes but their share is still falling as foreigners outpace them

 (SINGAPORE) Take a walk down some of the poshest parts of Singapore and your eyes will confirm precisely what the numbers say. With its immigration-friendly policies and its growing attraction for wealthy individuals across the world, Singapore is seeing more foreigners than ever before parking their funds in private property here - especially in the Core Central Region (CCR).

Singaporeans, too, are buying more private property but, in relative terms, their share is dwindling because of the foreign influx.

Result: From a 77 per cent share in the purchases of private apartments and condo units here in 2000, Singaporeans have seen their slice drop to 63 per cent in 2007, according to a study by Jones Lang LaSalle. This is their lowest share since 1995, which is as far back as the caveats captured by Urban Redevelopment Authority’s Realis system go.

Conversely, foreigners (including permanent residents) accounted for 29 per cent of non-landed private homes purchased here last year - nearly double their 16 per cent share seven years earlier and also their highest ever.

Companies account for the remaining purchases.

Market watchers expect the trend to continue in the mid- to long-term. ‘We need the external talent to support Singapore’s economic growth in the long term, as the citizen population has not been replacing itself sufficiently,’ says JLL’s head of research (SE Asia) Chua Yang Liang.

JLL’s study shows the trend of declining ratio of Singaporeans among non-landed private home buyers was most apparent in CCR - which has been a hotbed of purchases by foreign investors.

Here, Singaporeans accounted for 47 per cent or less than half the caveats lodged for the purchase of non-landed private homes last year, while foreigners (including PRs) had a 41 per cent share, nearly double their 21 per cent share back in 2000, according to Jones Lang LaSalle’s analysis.

Foreigners who are not PRs have shot up the buying charts. They picked up 26 per cent of non-landed homes that changed hands in CCR last year, compared to their 11 per cent share seven years earlier. CCR includes the prime districts 9,10 and 11, Downtown Core location and Sentosa Cove.

DTZ executive director Ong Choon Fah likens the luxury residential sector in CCR to Central London, with a high proportion of foreign ownership. ‘We’ll have to accept that Singapore will be open to international competition, with funds and high net-worth individuals coming in. People who cannot afford to live in these areas will have to find alternative locations,’ Mrs Ong says.

JLL’s study showed that even in the Outside Central Region (which covers suburban locations and is a realm dominated by typical Singaporean home upgraders), the share of foreign buyers (including PRs) went up to 22 per cent last year from 13 per cent in 2000.

In the Rest of Central Region, which covers the mid-tier market, foreigners’ (including PRs’) share increased from 18 per cent in 2000 to 29 per cent in 2007. The percentage of non-landed homes bought by Singaporeans in the area fell from 74 per cent in 2000 to 61 per cent last year.

Jones Lang LaSalle analysis covered caveats lodged for the purchase of non-landed private homes in both primary and secondary markets (including subsales).

Overall, the absolute number of such properties purchased by all categories of buyers has increased over seven years. The total caveats lodged for purchases of apartments/condos more than tripled, from 9,347 in 2000 to 30,576 last year. Even though Singaporeans bought more than they did in 2000, their share fell as purchases by foreigners saw higher percentage gains.

Islandwide, the number of private apartments/con- dos bought by Singaporeans jumped 165 per cent from 7,225 units in 2000 to 19,154 units last year.

Over the same period, the number of private apartments/condos bought by foreigners (counting PRs as well) leapt 496 per cent from 1,491 units in 2000 to 8,884 units in 2007.

The increase was due partly to the influx of foreign talent into Singapore. ‘As birth rate of the citizen population is below replacement level, in-migration has been necessary to sustain economic growth. As at end-2007, Singapore’s total population stood at 4.588 million, with well over a million foreigners. This is a 33 per cent increase from the 750,000 foreigners as at-end 2000,’ JLL says.

Source: Business Times (Published March 27, 2008)

The property market in Singapore is “very exciting” for property investors, it has been claimed.

Rhiannon Williamson, director of Amberlamb.com, explained that while prices have been rising since the middle of 2006, they are yet to reach the heights they did prior to the Asian financial crisis.

“This suggests that there is maturity and common sense in the market, which gives both domestic and international buyers a great deal of confidence in Singapore,” she said.

Ms Williamson added that “intense” demand and “incredibly” low interest rates, as well as the fact that rental rates are expected to rise by up to 20 per cent in some areas, mean that the country is a “very healthy market” for overseas investors.

“Analysts from leading financial institutions are all in agreement that Singapore’s real estate market will remain highly buoyant and successful throughout 2008,” she concluded.

Figures released by Global Property Guide show property prices in Singapore increased by 24 per cent in real terms during the first nine months of last year.

This made it the world’s best performing housing market, the website added.

This article was brought to you by holidaylettings.co.uk, the UK’s No.1 holiday home website.

Economic uncertainty has deflated house price inflation in the west, while returns in emerging countries have bounded ahead, figures show.

Global house price inflation in quarter four of 2007 stood at an annualised 8.2 percent, down from 9.7 percent a year ago, the Knight Frank global house price index shows.

Bulgaria topped the index with growth of 33.7 percent, followed by Russia at 30 percent.

In the Far East, Singapore and Hong Kong also outperformed the market, with annual growth of 31.3 percent and 22.3 percent respectively, as did China, where prices grew 10.5 percent overall and by 20 percent in some cities.

 See full article…

Source: Javno - (March 17)

Macquarie Global Property Advisors (MGPA) says it expects office rentals in Singapore to remain hot, jumping by 10 to 25 percent this year.

The Australian private equity real estate fund management firm is converting two plots of land at Marina View into twin office blocks. The two towers, expected to be completed in 2012, will also house a luxury five-star hotel.

These land parcels drew top dollars from Macquarie Global Property last year. Costing a total of S$3 billion, the sites will soon enjoy a S$5 billion makeover.

Site B, which Macquarie won last December for just under S$953 million, and Site A, for S$2 billion in September - are both on a 99-year lease.

Formerly known as Marina View Parcels A and B, the two-hectare site will be transformed into twin luxury office buildings, one of which will also house a 220-room five-star hotel.

Macquarie expects to announce in the next 3 to 4 months who they will be working with on the hotel.

It says the towers, due to be completed between 2011 and 2012, are well-timed to catch the growing demand for office space.

Simon Treacy, CEO, Asia Investments, MGPA, said: “I think around Asia, we are extremely busy - we see good value emerging around the region. In Singapore, we also think that there will be increased demand in the office sector - rents are likely to grow 10 to 25 percent this year.

“I think over the medium term, people will be surprised because they’ve underestimated the demand in Singapore for modern international grade office space.

“And we’ve seen that in Japan for 2003 and this year in Hong Kong. And, I think it’s a reflection of the solid economy of Singapore and the ongoing growth in a lot of the financial service sectors and wealth management in particular.”

The towers will be more than 40 storeys high and designed by Australian architect Denton Corker Marshall, who also designed the Melbourne Museum and the Australian Embassy in Beijing.

About 60 percent of both buildings will be set aside for office use: Tower A will house 130,000 square metres, and Tower B, 113,580 square metres.

Besides this project, Macquarie Global Property says it is looking out for other bargains.

Mr Treacy said: “I think over the last two years, a lot of investors have probably overlooked and undervalued Southeast Asia. I think now people are seeing very good fundamentals down here, and I think our timing was very good in making a number of acquisitions. We still think there is a very good value in buying… over the next 6-9 months.”

Office rentals in Singapore have been surging because of growing demand and a lack of supply. But more office space is expected to enter the market.

The government is targeting to double office space in the Central Business District to an estimated 2.82 million square metres. - CNA/ch

Source: Channel NewsAsia - 18 Mar 2008

Related Link: Forbes says “Macquarie Global Property to spend 2 bln sgd to develop Singapore sites - report“

BusinessTimes online writes that “Property may be big gainer as real interest rates plunge“, published 26 Nov 2007:

“(SINGAPORE) Rising inflation may be starting to worry policymakers and the man on the street, but it has had an interesting side effect. It has pushed down the real interest rate dramatically and is expected to drive the property market as buyers and borrowers take on more mortgages, which are costing them very little in real terms”

 It highlights that inflation may make putting money in the bank not really a good move:
“As OCBC’s Selena Ling put it: ‘There is no free lunch - our savings are also likely fetching a very low if not negative real return currently (calculated by subtracting the inflation rate from the nominal interest rates). The savings rate is about 0.25 per cent, while the 12-month fixed deposit rate is about 0.83 per cent.”

 In fact with the high rental market, if one look hard enough, one may able to find properties with high-rental yield. One example is Medge in D11 (Novena), in which rental yield is more than 5%. A 2rm unit today is around $900k, commanding rental around $3800-$4000. A 1rm unit at $699k, already comes with $3k rental.

That means, instead of letting you money in the bank earning 1-2% interest rate being erroded by inflation rate of 2-3%, you better off park it in property earning 5%. Not forgetting, you can also leverage on bank (current interest can be as low of 3.5% only).  Supposing you have $500k cash in bank (earning only 1%), you can just borrow from bank additional $200k to buy a $700k property with $3000 rental yield. The net effect, is $500k of your own money now grow 5% annually, and the borrowed $200k may even net 1% (minus interest), that’s additional bonus!  Moreover, you may even see capital appreciation in years to come as our IR becomes ready (that should cover all the misc cost like stamp-duty, legal cost, effectively). For those of you lamenting that your CPF is locked away, which not use it to buy property and generate addition cash income every month?

Rather than lamenting about inflation, why not be pro-active think about ways to cope with inflation, or even profit from it! Food for thought!

You might want to check out Adam Khoo’s blog about the returns on investment from Singapore properties.

By Yvonne Cheong, Channel NewsAsia | Posted: 17 October 2007 2323 hrs

SINGAPORE : Economists at the Nanyang Technological University (NTU) are forecasting that 135,000 jobs will be created next year.

That is less than the estimated 200,000 for this year but it will still be the fourth straight year that jobs growth has come in above 100,000.

Overall, economists at NTU are optimistic about the economic outlook for 2008.

They expect job creation to remain strong with some 135,000 new positions. This will see the unemployment rate dropping to 2%, down from 2.3% currently.

Wage increases are forecast to go up a lower 5.1%, compared to 8.1% this year.

Economists said the flexibility of Singapore’s foreign worker policy will keep a lid on wage pressures.

Said NTU’s Assistant Professor Randolph Tan: “This huge employment increase that we’ve seen in the last 2 or 3 years will have spillover effect over the coming years. The second factor is productivity increases. We expect to see fairly good productivity improvements over the coming quarters.”

“And they are already beginning to show. There has been an improvement in productivity levels. These two factors will mean that while there are a lot more job openings. These jobs openings can basically be filled ultimately.”

Meanwhile, higher inflation is also expected to persist into the first half of 2008.

“Inflation will go up for another half year or so mainly because of the one-time effect of the GST rate increase. It (Inflation) will sort of taper off in the second half of next year, but we don’t really see it coming down very much simply because when you have robust growth this year and next, cost pressures build up. Wages have been going up and eventually it’ll translate into a higher rate, so we still predict that inflation next year is going to be above 2 percent,” said NTU’s Assistant Professor Choy Keen Meng.

The overall economy is forecast to grow by 7.5% next year, with faster growth expected in manufacturing, transport and storage and information and communication sectors.

NTU economists are expecting the growth in construction and financial services sectors to be slightly slower next year, but they said the figures will still be healthy at 14% for construction and 11% for financial services. - CNA /ls

Source: CNA

He says Friday’s measure will inject some market reality

(SINGAPORE) Prime Minister Lee Hsien Loong yesterday said the government will continue to monitor property market trends closely and take further action if necessary.

His remarks come shortly after Friday evening’s announcement on the scrapping of the deferred payment scheme for property purchases, which Mr Lee described yesterday as a step that will ‘help to dampen excessive speculation and help to inject some reality into the market’.

Full Article at BT…

 See PM Lee’s full speech here…

It will be the firm’s biggest single manufacturing investment

By CHEN HUIFEN

(SINGAPORE) Swiss drug giant Novartis Pharma will invest another US$700 million in Singapore - hot on the heels of a US$180 million plant it opened yesterday.

 The US$700 million is for a major plant to produce protein-based drugs, known also as biologics or biopharmaceuticals.

It will be close to the company’s existing plant that makes drugs from chemically-synthesised substances.

‘We have six facilities at the moment in biopharmaceutical operations - five in Europe and one in California,’ said Novartis head of global biopharmaceutical operations Thibaud Stoll. ‘This new one will expand our operations in Asia and also in biopharmaceuticals.’

Full Article at BT…

 See Mr Lim’s full speech…

Published October 27, 2007

Deferred payments scrapped in bid to cool property fever

Market players expect blip, not crash, to follow the exit of the buy-now-pay-later scheme

By ARTHUR SIM AND UMA SHANKARI

(SINGAPORE) In a surprise move yesterday, the government said that it was withdrawing the deferred payment scheme (DPS) for the sale of uncompleted private properties in a bid to discourage speculative buying and cool the property market.

Market players said that the move could unnerve some buyers in the short term - leading to a drop in demand. A crash, however, was unlikely as the recovery of the mid-tier and mass markets this year shows that there is strong underlying demand from non-speculators.

Developers will not be allowed to offer the DPS with immediate effect, but a developer that has already obtained approval to offer the scheme for a project may continue to do so.

The DPS allows buyers to buy a property by forking out only a 10 per cent or 20 per cent downpayment, with the rest due upon completion - sometimes as long as three years later.

The scheme was introduced at a time when the property market was lacklustre and the economy was in recession.

But with the property market now booming, critics have said that the scheme encourages speculation as some seek to resell their properties at a profit without immediately worrying about payments.

Announcing the scrapping of the DPS yesterday, the Urban Redevelopment Authority (URA) said that the scheme was no longer needed as the property market has recovered.

Full Article at BT…

See URA Press Release…