Singapore Property Review

By Daryl Loo, Channel NewsAsia | Posted: 18 July 2007 1942 hrs

SINGAPORE : The Ministry of National Development has announced that development charge rates will be revised from the current 50 percent of the appreciation in land value to 70 percent.

The revised rates take effect immediately and apply to development applications where provisional permission is issued on or after July 18.

The Ministry said the development charge was lowered from 70 percent to 50 percent in 1985 to avoid eroding the share of value enhancement that accrued to developers in a declining market.

But with the current buoyant property market, the government has decided to reinstate the development charge to its original rate at 70 percent.

Property analysts said the immediate impact of the move will be to slow down the ongoing frenzy in en bloc sales, as it gets more expensive for developers to buy land for redevelopment.

It is also seen as helping to stem the sharp rise in home rentals, as fewer apartments will be lost to the wrecking ball.
See full article…

by Patrick Liew Siow Gian (14/Jul/2007 ST Online Letters)

I REFER to the letter, ‘HDB resale: Sellers’ market or agents’? (ST, July 7), and concur with the writer that you can sell a property without an agent and, therefore, save on commission.

However, to succeed, the seller needs to be competent in real estate marketing, legal, financial aspects, and other knowledge and skills.

This is important because you need to negotiate with increasingly sophisticated buyers. You need to outperform competitors, use latest technologies and stay ahead of the fast changing market.

To achieve the best results, you need to be constantly updated on market conditions, including past data and reliable projections. You need to review and compare similar houses that are currently in the market, especially those that have been sold or not sold in the past six months.

In a technology-driven market, you must use technologies that will provide you with powerful, timely, and accurate information to make better-informed decisions. These expensive tools are absolutely necessary and you need to go through proper training and guidance to use them correctly to enhance the results.

It is important to manage the marketing process correctly. This includes organising the marketing campaign, handling phone calls, qualifying buyers, conducting viewings, organising open houses, negotiating prices, completing the paperwork and closing the sale.

You must be prepared to respond to every phone call, including prank calls and calls from competitors, property sightseers and nasty buyers. In addition, you may have to conduct viewings of your house without advance notice and at your inconvenience.

Negotiation is a sophisticated skill that will contribute to the success of your sale. To do so, you need to suppress your emotions to prevent conflicts, handle unreasonable criticisms and respond to buyers’ whims and fancies.

You must protect yourself against unscrupulous buyers. You need to also protect yourself, your loved ones and personal belongings as you will be serving many strangers in your house.

From the above information, you can see that saving on agents’ commission may not cover the expenses needed to market your house successfully. In addition, you need to invest a lot of time, energy and effort. By taking yourself away from your work and other endeavours, you will also incur unnecessary opportunity costs.

That’s why you need an agent - not just an ordinary agent - you need a professional and competent specialist, equipped with the best tools and working as a part of the largest team in the industry to serve you and lead you to success.

Source: Straits Times - Online Letters

Construction sector swells almost 18%; muted impact from weak electronics sector

By ANNA TEO

(SINGAPORE) Flash estimates of Singapore’s second-quarter economic growth have brought out the superlatives - including the B-word, ‘boom’ - from economists.The 8.2 per cent GDP outperformance surprised not only because it is 1.5 percentage points higher than the market consensus, but also because it’s the highest growth in five quarters.In momentum terms, Q2’s 12.8 per cent seasonally adjusted, annualised pace over the preceding Q1 is, in fact, fastest since Q2 2005.

While the estimates - based only on April and May data - show across-the-board strength, especially construction’s ‘explosive’ near-18 per cent growth, economists are particularly impressed that the robust growth has come even with electronics in the doldrums of late.

Once a growth engine, electronics output was lacklustre in April and May, but total manufacturing activities still grew a more than decent 18 per cent in the period, thanks to the biomedical and transport engineering clusters.

The Ministry of Trade and Industry’s advance estimate of manufacturing growth in Q2 is 10.2 per cent, which suggests a June contraction.

See full article…  (Business Times, 11 Jul 2007)

Today’s ST Forum  (”HDB Resale: Sellers’ market or agents’?” ST, 07/07/07) came a letter from a property buyer. After reading it, I can’t help but feel the article is flawed in the points raised on the use of agents.

Logically, Mr Chia seems to be right. But in reality, it’s not the case.  Think again, using his example of a buyer with his own agent willing to offer $30k more than another offer of $720k from a direct buyer. In this up market, almost all good units are sold above valuation which requires cash, which means the extra $30k is definitely cash (and not loan). Would any buyer in his right mind pay $30k more cash when he could simply have offer to compensate the seller’s agent $7.5k for lost of commission if he’s using his own agent? Of course he could have even save this $7.5k by just using the seller’s agent.

An ethical agent would simply be open to the sellers they serve, sellers are usually most happy to compensate that 1% (eg $7.5k) out of the higher price (eg $30k) they get.

Mr Chia seems to suggest that ‘thousands on commission’ can be saved if seller attends HDB’s monthly resale seminar and sell their own property. Again, this seems logical, but in reality I consider this to be a short-sighted thought. Paper-work is just one part of selling, negotiation for better price is the important part. Who can negotiate better? A typical seller who sells 1 property in 3-5 years, or a property agent who sells 3-5 properties in 1 month?

Agents active in the area are well-versed with the price movement on a daily basis, even before the prices reach HDB website. So when a seller sells his own property, and got his asking price of $300k from a direct buyer, he may think it is a good price because HDB website shows last transaction $280k, not knowing that another similar unit just sold at $320k. As a result, while he thought he’d saved commission of $6k by doing his own paper-work and advertising, he in fact just lost $20k and lots of precious time on paper-work and money on advertising.

Why pay yourself $6k to do paperwork when you could pay yourself $20k to do nothing?

Source: Business Times (published 06 Jul 2007)

Lessons learnt, bonds forged in ‘97 financial trauma

By CHUANG PECK MING

(SINGAPORE) Monetary Authority of Singapore (MAS) chairman Goh Chok Tong does not see a financial crisis coming, even if there’s some correction in the stock market.

‘I don’t think a financial crisis will happen,’ he told the British Broadcasting Corporation in an interview marking the 10th anniversary of the Asian financial crisis. ‘But whether the stock market will continue to go up and share prices go up the way they have gone up, I don’t know.’

Mr Goh, who is also Senior Minister, does not think the government should interfere in the stock market.

‘Should the authorities warn? The market has got to decide, provided the information is there,’ he said. ‘People know the price-earnings ratio, they know the worth of a particular stock, whether the thing will go up. We’ll let them decide.’

See full article… (Business Times, Published 06 Jul 2007)

 Click here for the transcript of SM Goh’s interview with BBC.

Lian Beng buys freehold cluster in Mountbatten
It pays $42m for 47,400 sq ft site with 8 semi-Ds in private treaty

By UMA SHANKARI

LIAN Beng Group has acquired a cluster of eight freehold semi-detached houses along Mountbatten Road for $42 million through a private treaty, the company said yesterday.

The average price for the site works out to about $633 per square foot per plot ratio (psf ppr), inclusive of a development charge (DC), Lian Beng said. The company did not specify the amount of DC payable.

The 47,400 sq ft land parcel, which includes an adjoining piece of state land, has a plot ratio of 1.4 - giving it a maximum gross floor area of 66,400 sq ft. The site has the potential to be redeveloped into a 60-unit condominium averaging 1,100 sq ft each, Lian Beng said.

‘Going by current market prices in the vicinity, the redeveloped units with condo facilities should be able to fetch $1,100 psf and above,’ said Donald Han, managing director of property firm Cushman & Wakefield, which brokered the deal.

 Source: Business Times

Lian Beng buys freehold cluster in Mountbatten
It pays $42m for 47,400 sq ft site with 8 semi-Ds in private treaty

By UMA SHANKARI

LIAN Beng Group has acquired a cluster of eight freehold semi-detached houses along Mountbatten Road for $42 million through a private treaty, the company said yesterday.

The average price for the site works out to about $633 per square foot per plot ratio (psf ppr), inclusive of a development charge (DC), Lian Beng said. The company did not specify the amount of DC payable.

The 47,400 sq ft land parcel, which includes an adjoining piece of state land, has a plot ratio of 1.4 - giving it a maximum gross floor area of 66,400 sq ft. The site has the potential to be redeveloped into a 60-unit condominium averaging 1,100 sq ft each, Lian Beng said.

‘Going by current market prices in the vicinity, the redeveloped units with condo facilities should be able to fetch $1,100 psf and above,’ said Donald Han, managing director of property firm Cushman & Wakefield, which brokered the deal.

 Source: Business Times

They may not have factored in additional supply generated by latest govt initiatives

The URA yesterday said property consultants’ projections of office rent hikes - like Savills’ projection last week that Singapore office rents could surpass Hong Kong’s by end-2008 - should be interpreted with caution.

See URA’s Press Release…

Business Times - 03 Jul 2007 Q2 private home prices surge 7.9%, with gains reaching mass market and HDB resale segments By KALPANA RASHIWALA (SINGAPORE) Official flash estimates show the rise in home prices spreading beyond the high-end to other parts of the market including private condos in the city fringe, mass market areas and even to the HDB resale market - prompting some words of caution from the Urban Redevelopment Authority (URA).

It is out to woo foreigners with its relatively cheaper housing prices

Jul 03, 2007
The Straits Times

KUALA LUMPUR - MALAYSIA is set to roll out plans to make itself an international property destination, banking on its cheaper property prices compared with countries such as Singapore.

The government is likely to introduce a grant of RM50 million (S$22 million) for international promotions, said Minister in the Prime Minister’s Department Effendi Norwawi.

He told The Star in an interview: ‘The idea is to make Malaysia a destination for foreigners to buy properties. Property prices here are so much cheaper than in places such as London and Singapore. We should show that we have real value for money.’

See full article…

As property performance somewhat move in tandem with the stock prices, it may serve as a good indication to monitor the stock performance in Singapore too…

Is it time to sell?

By Lorna Tan - July 1, 2007
The Straits Times

SHARE markets in Singapore and across Asia have been racking up some impressive numbers over recent months, even with this week’s minor retreat.

And while soaring markets might look like easy money, many experts are advising investors to switch out of overvalued markets and move to safer territories.

A Citigroup Research report on Monday called for a ’sell’ on Singapore stocks with its chief Asia strategist, Mr Markus Rosgen, recommending that investors channel their money to Taiwan instead.

The report was issued after the Straits Times Index (STI) hit a record high of 3,639.49 points on June 21, the same week that markets in Kuala Lumpur, Jakarta, China and South Korea were surging to dizzying heights.

The performance of the STI was mixed over the past week or so - it fell by 133 points over a four-day slide, then bounced back on Thursday and Friday to end the week at 3,548.2.

The Sunday Times polled some market watchers about Asian bourses to help investors sort out the gold mines from the minefields.

Expensive markets

Singapore

Citigroup’s caution over Singapore comes after three years of rating the market as overweight - that is, putting a greater proportion of stock finds here as opposed to other markets.

The share prices of Singapore firms are considered expensive compared to the assets reflected in their respective accounts. Currently, the ratio of the share price to book value is 2.6 and that is the highest in 17 years.

In contrast, the same ratio for Taiwan-listed firms is 2.2.

Mr Rosgen recommends Taiwan where valuations are much lower, at levels seen only in crisis periods.

Mr Joseph Chong, chief executive of financial advisory firm New Independent, agrees, warning that there are signs of overheating in the economy as wages and rents have been rising much higher than gross domestic product growth.

However, the research manager at Fundsupermart, Ms Mah Ching Cheng, believes that though Singapore is no longer cheap, it is still ‘reasonably valued’.

For those still keen on Singapore stocks, fund manager William Cai sees upside in counters such as Chuan Hup, Global Test and Amtek Engineering.

However, he suggests selling Celestial Group, Penguin Boat International, Cosco Corp, SingTel, Reyoung Pharmaceutical Holdings and Magnecomp International.

See full article…