The Housing and Development Board (HDB) does not price its flats on a cost-plus-profit basis, but on ‘market price less a generous discount’, said National Development Minister Mah Bow Tan in Parliament on Monday.

He shared that the total cost of building flats varies depending on when, where and what HDB builds. The cost includes the cost of land as well as the constuction costs of flats and ancillary services. The total cost can vary from $230,000 for a 3-room flat in Punggol to $530,000 for a 5-room flat in Tiong Bahru.

‘Together with the Additional Housing Grant which varies from $5,000 -$40,000… on average the subsidies amount to about 20 per cent of the market price for 4-room flats. It will be even more for smaller flats. This is the subsidy given to all first-time buyers, to keep the flats affordable.’

Source : Business Times – 23 Nov 2009

The anti-speculative measures implemented by the government in September to cool the property market have worked, said National Development Minister Mah Bow Tan in Parliament on Monday.

‘These measures appear to have had some effect in tempering the exuberance in the private housing market,’ he noted.

The government on September 14 announced a package of measures to prevent a property bubble from forming. One of these measures was the removal of the Interest Absorption Scheme and the Interest-Only Loans (IOL).

Another was the resumption of land sales on the Confirmed List for the first half of 2010.

Source : Business Times – 23 Nov 2009

Some homeowners at the Pine Grove estate along Ulu Pandan Road are making another attempt to sell their properties in a collective sale.

This will be their third bid since 2005.

MediaCorp understands that the minimum reserve price for the 660-unit unit estate is S$1.33 billion.

Depending on the size of the unit and the development charge that is payable, owners stand to pocket an average of S$2 million per unit.

The former HUDC estate has a land area of more than 893,000 square feet.

Farrer Court, another former HUDC estate along Farrer Road, was sold for a record S$1.34 billion in 2007.

Pine Grove’s reserve price is higher than the S$1.2 billion price tag that the Laguna Park estate in Marine Parade had expected in its first tender in September.

Even after the price was reduced later to S$967 million, the Laguna Park collective sale was called off last week.

At Pine Grove, there have already been three sessions to collect signatures for the possible enbloc sale since 15 November.

A fourth session is coming up next Thursday.

At the upcoming session, representatives from property consultancy Jones Lang Lasalle and law firm Lee & Lee will be present to answer homeowners’ questions.

Source : Channel NewsAsia – 23 Nov 2009

The Housing & Development Board (HDB) has projected it will need to offer between 10,000 and 12,000 new flats per annum over the next five years to meet the housing demand in Singapore.

Speaking in Parliament on Monday, National Development Minister Mah Bow Tan re-assured that there will be enough affordable flats for first time buyers.

This year, at least 13,500 flats will be offered in total – enough to fill at least half of Bukit Panjang or Pasir Ris, said Mr Mah.

In fact, the ministry was able to ramp up supply quickly at mid-year when demand rebounded.

The minister noted that despite the high demand for housing, expectations of first-time buyers have changed over the years, with many demanding for flats in prime estates or on higher floors.

“I cannot build flats only in the mature estates, only in the city area. I cannot build flats that are only on high floors.”

“We were living in a three-room flat in Kim Keat Avenue – eight of us (shared) three bedrooms, one toilet and bathroom,” Mr Mah said of his past experience. “It was basic but it was like a palace to use because I had just come from a one-room in Chinatown.

Mr Mah explained that the five-year projection serves as a guide for the Build-To-Order system – which is more flexible and can then respond to changes in demand.

With more foreigners coming to live and work in Singapore, Members of Parliament (MPs) also asked whether this new group was adding further to the demand pressure for flats.

“PRs are not eligible for buying new flats, even in the resale market, quite a lot of them actually rent. They are under-represented as far as purchases are concerned,” explained the minister.

Mr Mah also gave an idea of how flats are priced, saying that they are not based on cost plus profit, but the flat’s market price minus the subsidy.

Hence, the cost of a flat could vary from S$230,000 for a room flat in Punggol to a S$530,000 for a five-room flat in Tiong Bahru.

Source : Channel NewsAsia – 23 Nov 2009

The median resale prices of executive condominiums (ECs) have increased 63 per cent in the last two years, riding on the bull-run in the private residential market.

Property consultancy CB Richard Ellis said caveats lodged for ECs in the resale market in October this year showed prices at S$519 per square foot.

This is 63 per cent higher from the bottom of the market in the third quarter of 2006 when ECs in the resale market were sold at S$319 per square foot.

Li Hiaw Ho, executive director at CBRE Research said the analysis shows that buyers who bought new ECs at various periods from 1996 should benefit from the price appreciation in the last two years.

Currently, a 14 per cent price gap exists between the median prices of ECs and mass-market non-landed projects in the resale market.

In the recently announced Government Land Sales programme for the first half of 2010, the government placed two executive condominium sites on the confirmed list and three others on the reserve list.

CBRE said it is a clear signal that the government wants to provide the EC as an alternative housing choice for homebuyers from next year.

The last EC launched was La Casa in May 2005 and it was completed in early 2008.

Going forward, CBRE expects the tender bids for the two new EC sites on the confirmed list, at Buangkok Drive and Yishun Avenue 11, will be a function of developers’ confidence in the EC market and their pricing strategy.

If the price gap between the next new EC project and a new private non- landed leasehold project in the same location is attractive enough, homebuyer demand for EC development will surely return.

Source : Channel NewsAsia – 23 Nov 2009

The government said on Monday the measures taken to cool the property market appear to have had the desired effect.

Speaking in Parliament, National Development Minister Mah Bow Tan noted that since the measures were introduced, the sale of private homes fell 37 per cent on-month in September, and another 29 per cent in October.

In September, the government removed the Interest Absorption Scheme and Interest-Only Loans to temper the exuberance in the property market and to prevent a bubble from forming.

The government has also announced it will resume land sales under the confirmed list of its land sales programme in the first half of 2010.

Mr Mah said the government will continue to monitor the property market closely to assess the market’s response to the measures introduced before deciding whether further measures are needed.

“Our key interest is to ensure that property prices and rentals remain competitive and move in line with economic fundamentals. We want to curb erratic spikes in prices due to excessive speculation, inaccurate information or market manipulation,” the national development minister said.

“But we must let market forces determine prices, based on genuine demand from home-buyers and investors.”

Mr Mah added that the measures introduced in September have also helped to control speculative activity. Government records so far indicate that the number of sub-sales today is not as high as it was during the height of the property market boom.

Sub-sales are closely watched as a gauge of speculative activity in the property market.

“The two schemes that we have removed or disallowed are rather targeted, targeted at the speculators, for example, who would make use of these schemes to flip or turn over properties quite rapidly. We have taken a calibrated approach to the property market. The idea … is to cool the market, not crash it,” Mr Mah said.

The minister said the government may remove the cooling measures in future if the property market stabilises or weakens, but it is too early to say when that might happen.

Analysts MediaCorp spoke to said they expect the property market to remain subdued in coming months.

Nicholas Mak, adjunct lecturer for Business & Environment at Ngee Ann Polytechnic, said: “(The cooling measures) have a psychological effect on speculators, removing many of them from the market. Another factor is that a large part of sale volume we experienced in the first half and later part of this year is mainly due to the sale of 99-year mass market condominiums. Developers are running down on inventory on such stock. As a result, home sales will start to slow down.”

In addition, fewer launches are expected in the year-end period.

Ang Choon Beng, director and head of research services at Cushman & Wakefield, said: “I think the November and December months will be quiet because it’s the holiday season. Most developers will only start launching new projects after the holiday season is over.

“The current situation is that developers are under no pressure to sell because they have substantially sold down their inventory. They have already sold down about 45% of total upcoming supply. So developers are not under any sort of pressure.”

But analysts do not expect prices to trend down yet.

“There’s excess liquidity in the market as a result of global low interest rates. Because Singapore is a transparent and open market, some of this money may come in. That may be an underlying factor that will support the property market in Singapore,” said Mr Ang.

Analysts expect prices to rise moderately, at about 5 to 10 per cent in the year ahead. The bulk of the increase is expected to take place in the mid to higher end of the market, as prices of mass market homes have already reached a high.

Source : Channel NewsAsia – 23 Nov 2009

IMAGINE paying no more than $3,500 a month to live in a centrally located, million-dollar, two-bedroom apartment.

But here’s the catch: The apartment could be decades old, and already sold en bloc – so you may not have very long to live there.

For the time being, rent is going for a song in at least 23 mature condominium developments in the central part of Singapore.

These developments, with more than 2,000 units in all, had originally been bought by developers for en bloc redevelopment in 2006 and 2007.

About half of the 23 estates are located within prime districts nine to 11 – the prestigious Newton, Orchard and Tanglin belt – based on data compiled by property consultancy CB Richard Ellis’ (CBRE) research team, online property-search firm All Property Media and my paper.

But after the recession hit, demand for new properties nosedived, so developers held back redevelopment plans and leased out these condos instead.

This move would help the developers defray the costs of holding onto the properties without developing them, industry experts said.

Ngee Ann Polytechnic real-estate lecturer Nicholas Mak said: “The property market softened during the second quarter last year.

“Developers realised that the high-end market couldn’t support prices they wanted, and braced themselves for a long recession in the second half of last year.

“No one at that time knew how long it would last. So, rather than leaving the acquired buildings empty, developers decided to rent their properties out.”

Inhabitants of these en bloc estates run the gamut from Middle Eastern medical tourists to expatriates, foreign students and Singaporeans waiting for HDB flats.

Particularly popular with foreign students taking courses at the East Asia Institute of Management (EASB) in Ah Hood Road are five properties located in an area bound by Balestier Road, Thomson Road, Jalan Raja Udang and Jalan Datoh.

A mechanic working in the area, who declined to be named, noted: “Some of the girls living here might appear to be students by day, but by night they prowl the streets all dolled up. A friend was solicited once.”

Real-estate developer City Developments Limited (CDL) had acquired the five properties – The Albany, Thomson Mansion, Bright Building, Concorde Residences and Balestier Court – in 2006 and 2007.

my paper understands that these condos were leased out sometime in March this year to three master tenants – companies that shoulder responsibility for the maintenance and occupancy of these properties.

One of them, Malaysia-based intermediary-services company British Capital Group, is the master tenant for Balestier Court and the adjoining Concorde Residences and Bright Building.

The group’s on-site manager, Ms Michelle Feng, said that the company, whose main business is to provide financial services, had spent tens of thousands to upgrade the lifts and mend the water pipes.

It also pays for weekly fogging of the condominiums to kill mosquitoes.

It leases the apartments out to individuals, up to eight of whom can share a unit.

A month’s rent costs $500 to $600 for a bedroom in one of its 72 units, and $2,250 for a 167-sq m apartment.

But business has not been terribly lucrative because many expatriates have returned to their home countries during the recession, and because of maintenance costs, said Ms Feng.

When asked how it kept tabs on the estate and its tenants, Ms Feng said staff from CDL drop by every month. Officers from the Urban Redevelopment Authority and the Ministry of Manpower often visit to check the estate for signs of illegal activities.

Ms Han Jing Jing, 19, and Ms Lu Jiali, 23, both students of EASB’s three-year bachelor’s degree programme in hospitality and tourism management, had found lodgings in Bright Building and Concorde Residences, respectively, in August through word of mouth.

Ms Han, who is from Wunan, China, pays $350 a month and shares her room with two other women, also classmates. Ms Lu, a Malaysian, pays $300.

Their rental contracts are for six months.

Both expressed surprise when this reporter asked when their buildings would be torn down.

“I love the location. It’s only a 15-minute walk away from my school. It would be a pity if we’re not allowed to live here anymore,” said Ms Lu.

But the good times for such tenants are set to end soon. CBRE investment properties executive director Jeremy Lake said: “For most of the projects, they are probably back into profit, whereas nine months ago they were not… It is a plausible proposition to redevelop now, in view of the strong market conditions and demand for new launches.”

Mr Charles Chua, PropNex’s head of investment sales & en bloc, said: “En bloc projects were put to the rental market, out of a no-choice situation, as the rental yield may not be attractive.

Therefore, if our prognosis is correct, work on all en bloc projects that were put on hold will be resumed as soon as possible to get them to launch in the market.”

A 177-unit freehold condominium is expected to be built by CDL where The Albany and Thomson Mansions are now standing.

While CDL is tight-lipped about the date of its launch, real-estate agents estimate that the showflat would be ready for viewing by the end of this year.

Occupants of The Albany and Thomson Mansions are said to have about another year before they have to move.

Tenants of another development, Lincoln Lodge in Newton, have to move out after May next year.

It will be replaced by Lincoln Suites, which was recently soft-launched by Koh Brothers, Heeton Holdings, KSH Holdings and Lian Beng Group.

Similarly, tenants have to leave Sophia Court in Sophia Road, which is expected to make way for the new Sophia Residences, to be developed by GuocoLand by the end of this year.

Mr Mak said: “Residential rentals are still weak in the market. However, when the midand high-end markets start to recover robustly sometime next year, the developers would launch the proposed redeveloped projects for sale. That would also be the time when rentals are likely to increase. Therefore, the tenants could be asked to look for alternative homes at the time when rentals are rising.”

Source : my paper – 23 Nov 2009

Real estate investment trusts (REITs) may have taken a battering in the wake of the global financial crisis, but according to experts, they have rebounded sharply and recovered more quickly than other equities.

Some market watchers said REITs hold great potential in the new post-financial crisis investment landscape.

Singapore’s Raffles City has undergone a major facelift since being managed by a REIT. While that translates into a better shopping experience for customers, the upgrade was mainly driven by a need to improve shareholder returns.

As REITs grow in popularity as an investment vehicle, experts said transparency and liquidity are key. This is especially so because of the ageing populations in the region.

Susan Wachter, Wharton School, University of Pennsylvania, said: “REITs are at an early stage in Asia and it took 20 to 30 years for REITs to grow to a substantial potion of the market in the US. So this is the beginning of what is probably an important role of REITs going forward.

“But REITs are particularly useful as an investment vehicle for yields, and in that respect, perfect for pension funds and retirement funds more generally. Thus as the needs for this grows in Asia, this will be an important vehicle.”

Japan, Australia, Singapore and Hong Kong are seen as leading the REIT market in Asia. Quality assets aside, market watchers said education is important for further growth.

Christopher Gee, executive director, J.P. Morgan Securities, Singapore, said: “We certainly need a lot more education, not just for the investors, but also the REIT managers need to know what is the right thing in the right formula.

“We had a big discussion about cost appropriate or the expenses are appropriate for the REIT project so there are a whole heap of things that need to be sorted. It’s not a perfect vehicle – regulators certainly need to understand a little more about this particular vehicle as well.”

With the booming property markets in China and India, market watchers said they could become the next big growth markets for REITs.

Source : Channel NewsAsia – 23 Nov 2009