Aspen Heights may be 11 years old, but the massive 606-unit condominium located along River Valley Road has been enjoying a resurgence of interest from homebuyers, riding on strong sales of new developments nearby. After only 15 transactions hovering at the $1,000 psf level in the first half of 2009, more than 30 units have changed hands in 2H2009, with prices surging past $1,400 psf. For the period Dec 23 to 31, there were three caveats for units sold at $1,250 to $1,450 psf, according to URA Realis.

After the onset of the financial crisis in late 2008, prices at Aspen Heights sank below $1,000 psf for about half a year, before rebounding strongly in June 2009 with the rest of the market. The main reason for the upturn could be the strong sales of nearby developments, including The Wharf Residence and Martin Place Residences, which were among the top sellers last year.

The two upper-mid-tier projects were relaunched in mid-May last year at prices that were 20% lower than in early 2008. For instance, in mid-May last year, CapitaLand had priced the remaining units at the 173-unit The Wharf Residence on Tong Watt Road off River Valley Road at $1,200 to $1,500 psf, compared with $1,500 to $1,900 psf for the first phase released at previews in mid-2008. Meanwhile, Frasers Centrepoint Ltd also relaunched Martin Place Residences at Martin Place off Kim Yam Road at $1,260 to $1,700 psf, compared with its soft launch in early 2008, when 28 units were sold between $1,700 and $2,000 psf.

Since last May, however, prices of both projects have enjoyed an uplift. Last October, a high of $1,496 psf was achieved in a new sale by the developer when a 2,206 sq ft unit at The Wharf Residence was sold for $3.3 million. The condo is expected to be completed in 2013.

Likewise, at the 302-unit Martin Place Residence, sales have picked up since May. Last month, a 1,044 sq ft unit was sold for $1.88 million, or $1,800 psf, in a sub-sale according to a Dec 2 caveat. This is a 13.7% gain for the original owner, who purchased the unit from Frasers Centrepoint Homes and sold it in just six months.

The buoyant demand for homes in the River Valley Road area could also have been sparked by the new shopping centres that opened along Orchard Road last year: ION Orchard, Orchard Central, 313@Somerset and Triple One Somerset (at the former Singapore Power Building site). Easy access to a range of good schools like River Valley Primary School and Singapore Management University as well as cafés and restaurants in the Robertson Quay area continue to reel in families with school-going children as well as investors.

New developments under construction have also drawn buyer interest to existing developments in the River Valley and Mohamed Sultan neighbourhood. The largest project in the area is easily Aspen Heights, developed by the former DBS Land (now part of CapitaLand). Units range from 882 sq ft two-bedroom apartments to 1,604 sq ft for four-bedrooms, while penthouses measure 2,691 to 3,143 sq ft.

With prices recovering to 2007 levels, it’s also a good time for owners looking to sell their properties. According to a Dec 30 caveat, a 1,324 sq ft unit on the fifth floor of block 263 (one of two blocks) changed hands for $1.67 million, or $1,260 psf, translating into a 23% gain for the seller, who purchased the unit in early 2007.

On the 10th floor of the neighbouring block 261, a 2,691 sq ft penthouse fetched $3.9 million, or $1,450 psf. That’s a 19% gain for the seller, who purchased the unit for $3.28 million three years ago, according to a March 2007 caveat.

With renewed investor interest in projects in Orchard Road and investors targeting both older projects and new launches, it won’t be surprising to see resale prices at Aspen Heights returning to or even surpassing mid-2007 levels.

Source : The Edge – 25 Jan 2010

LAST December, MP Lim Wee Kiak saw a notice pasted illegally on a wall in his Canberra ward of Sembawang GRC. It was written entirely in the Myanmar language.

Curious, he got it translated. The notice was from a real estate agent offering his services solely to Myanmar permanent residents (PRs) looking for flats here.

Dr Lim was disturbed as he saw this as a tell-tale sign that ethnic congregation of foreigners was beginning in HDB estates.

Such concerns are evidently shared by the Government.

The HDB disclosed on Wednesday that it was considering introducing a separate ethnic quota for PRs to prevent enclaves from forming in estates.

Earlier, Minister Mentor Lee Kuan Yew said at a dialogue that the Government did not want to see new citizens congregate and would disperse them across HDB estates.

Recognition of this as an issue was welcomed by seven MPs who were contacted yesterday about the situation in their wards, and for their views on how such a quota could be implemented.

The HDB has not provided details of what the changes might entail.

But several MPs did point out yesterday that it was through renting of flats in the same areas – and not necessarily buying flats – that PRs have also been able to congregate.

Latest available data showed that as of June last year, only 4.9 per cent of HDB flats were owned by PRs.

Hence, a quota imposed on home-buying by PRs might make little difference.

The Ethnic Integration Policy (EIP), introduced in 1989, aims to maintain a healthy racial mix in housing estates by stipulating maximum proportions for the key ethnic groups.

But MP Charles Chong, whose Punggol Central ward, like all new estates, has seen an influx of foreigners, said the EIP now is too porous for a new generation of PRs.

‘The Indian community is pretty diverse. Sri Lankan is classified as Indian; Bangladeshi, Pakistani, northern Hindi-speaking Indians are all classified as Indians (for purposes of the EIP).’

If there are no sub-divisions, there could arise an enclave, say of Bangladeshis, all staying in the same block or precinct, he pointed out.

The same goes for mainland Chinese, Taiwanese or Chinese-Indonesians, who are all classified under ‘Chinese’.

Dr Lim argued, however, that the important distinction to make is not within ethnic classifications, but between Singaporeans and PRs. He said there are some floors of HDB blocks in his ward where more than half the residents are foreign.

They are a mix of nationalities. So although there is no ‘ethnic’ enclave as such, there is a high concentration of foreigners ‘to the point where Singaporeans feel threatened and become a minority’.

When that happens, then it becomes an issue, he said.

Dr Lim suggested a quota limiting the proportion of PRs in each precinct or block to the proportion of PR homeowners nationwide – or about 5 per cent.

MP Ho Geok Choo – who recalled a visitor describing her Boon Lay ward as being so cosmopolitan that it felt like being overseas – said a quota would help dampen excessive property prices. This would make it more difficult for PRs to artificially inflate prices in certain areas by all snapping up flats there, she said.

It would also assuage the concern of those Singaporeans who feel besieged in their neighbourhood by new sights and smells. On her house visits, every block throws up at least two or three Singaporeans who voice their concerns about this, she said.

But ultimately, a quota on home-buying may not make much of a difference.

Jurong GRC MP Halimah Yacob said more than 70 per cent of foreigners in her Bukit Batok East ward are renting. They rent in the area as it is close to their workplaces in the West.

While it is possible to envision an ethnic enclave of renters, ‘there’s nothing you can do (about where PRs rent)’, she said. The rental market is left entirely to free market forces.

Regardless, director of Dennis Wee Properties, Mr Chris Koh, foresees a big plus if a new quota is implemented: It would puncture the belief that some Singaporeans have that their flats can fetch a higher price if they sell them to PRs.

Sellers who hear that a certain nationality is prominent in the neighbourhood pressure agents to find such buyers, thinking it will mean more profits, he said.

‘If quotas are set… we can tell them, ‘We hit the quota max already and we have to be realistic about the price.”

Source : Straits Times – 29 Jan 2010

I REFER to last Saturday’s report, ‘Cash premiums for HDB flats hit a high’.

Why is there so much focus on premium over valuation when valuations by property agencies have no fundamental basis?

Such valuations are based simply on comparable recent transactions and are virtually meaningless to the long-term buyer.

For example, in the landed housing segment, valuations were severely depressed during the economic downturn from November 2008 until March last year, and property agencies used valuations based on transactions of similar properties.

So, if a desperate seller needed to sell his property at virtually any price (which was the only price available at that time), that absurdly became the ‘valuation’ for the next seller.

Many so-called valuations were even less than government land auction prices 12 to 15 years ago, even though the replacement cost of these properties was far higher.

Ultimately, the fundamental value of properties depends on future rental yields, replacement cost of the property and more subjective ‘growth catalysts’ such as higher incomes and population, and new developments.

Based on these factors, the public market valuation reflected in cash premiums is a more reliable indicator than superficial valuations by property agencies, which is nothing more than a fee generator for them.

Bobby Jayaraman

Source : Straits Times – 29 Jan 2010

I READ with interest Wednesday’s letter by Mr Robin Chua, ‘Costly flats – How did it come to this?’

Mr Chua appears to allude to the fact that the procreation rate has not risen because of higher prices of public housing, and ‘mixed signals’ in which young couples are urged to marry and have children early to help increase the procreation rate but then told indirectly to wait five years to buy a flat and start a family.

Without doubt, there have been calls to stop the practice of high cash over valuation (COV) and lower HDB resale prices. My take is that things should remain as they are and be dictated by market forces.

My paternal grandparents bought their first HDB flat in Bedok in the 1970s for about $7,000 – a sum that was paid in full in cash. Today, that three-room flat in a mature estate could be sold for $200,000 or more.

I believe elderly Singaporeans who bought such flats would be thankful they can cash out and unlock the value of their fully paid-up flats to see them through their remaining years.

Other Singaporeans who bought their flats later, say in the 1980s, would also be exuberant as they can capitalise on the capital appreciation of their HDB flats to downgrade to smaller units and use the savings for retirement and other needs.

A case in point is the Lease Buyback Scheme, where Singaporeans living in three-room flats can unlock the value of their homes and live on regular monthly payments from the authorities. This mechanism shows how the housing system can enrich Singaporeans when they reach retirement age and that citizens have a stake in the country and their well-being is not forgotten.

Another group who would have benefited from high HDB resale prices and COV prices is those who were caught in the property craze of 1996-1997. Some Singaporeans bought their HDB flat at a peak, and the value of their home tumbled. In negative equity then, these owners must now be relieved and thankful for the system, plus other external factors that steered them back to positive territory.

In essence, these factors play a part in stimulating economic activity where sellers of HDB resale flats with excess cash and housing agents with their sales commission contribute to gross domestic product figures with their spending. When this happens, the economy is buoyant, jobs are created, people are employed and confidence is restored.

Again, my take is that we are fortunate to have a system to help citizens secure an HDB flat tailored to suit their household income, have a stake in the country and ensure capital appreciation of their assets which will come in handy for future needs.

Irwan Jamil

Source : Straits Times – 29 Jan 2010

THE Housing Board is embarking on a review of its rules to ensure that property speculators are not abusing the system – and driving up flat prices.

It will check if any rules are ‘encouraging or allowing’ people to speculate on HDB flats, said National Development Minister Mah Bow Tan.

At the same time, it will step up efforts to make sure people do not get away with abusing the system.

Some disgruntled homebuyers, priced out of a rising market, worry that some HDB buyers are exploiting the rules to try to make a fast profit.

They claim these speculators snap up flats on the resale market and then either rent them out illegally or sell them legally after the stipulated one-year period.

Under HDB rules, citizens and permanent residents who buy resale flats without housing grants or HDB loans must live in the flats for at least one year before selling, or at least three years before renting out the entire flat.

Speaking on the sidelines of a housing conference hosted by the HDB on Wednesday, Mr Mah said these claims were worth checking and he wanted to ensure that such factors were not inflating the market artificially.

He said it would not do if buyers were buying flats because they hoped to make money through flipping or selling the flats later on, or by renting them out without living in them.

He did not know how prevalent such practices were, but added that ‘anecdotally, you do hear cases, so I want to make sure that this is not happening’.

The HDB’s findings will be out in a couple of months, he said.

Industry observers said that if there were speculators, they would be less likely to be flipping HDB flats – reselling them quickly – and more likely to be renting them out.

‘HDB flats in good locations enjoy very high rental yields, up to 7 or 8 per cent. Even if owners are not legally allowed to rent out their whole flat, you hear of creative cases where they do so anyway,’ said ERA Asia Pacific associate director Eugene Lim.

Agents said an owner might lock up a room to make it seem he is still living there, even though he has rented out the entire flat.

Chesterton Suntec International research and consultancy director Colin Tan said this has gone on for years, but these cases were hard to prove and needed a major effort to enforce.

Mr Mah acknowledged that recent housing data had raised fresh concerns about high resale flat prices.

Latest HDB figures showed the median cash amount paid by buyers for resale flats over and above a flat’s valuation, known as Cash-over-Valuation (COV), doubled to $24,000 in the last three months of last year compared to the previous quarter.

Resale flat prices also rose 3.9 per cent in the final three months of last year to hit a fresh record, taking the full-year jump to 8.2 per cent.

Mr Mah said the Government did not wish to meddle in the resale market, and COV payments were part and parcel of the market.

‘If you’re a buyer, you feel anxious, understandably you want prices to be low. But if you’re a seller, you want prices to be high. It’s not possible for the Government to set the resale prices,’ he said.

‘The buyer might be happy today, but tomorrow he’s a seller and if we set the prices of what he wants to sell, he’ll be unhappy.

‘Let the price be set by willing buyers and willing sellers. We don’t, and should not, interfere in the resale market.’

Mr Mah also downplayed the impact of permanent residents on the resale market.

‘Our numbers show that the PRs are buying about 20 per cent, or one in five flats sold. So yes, they do have some impact, but they don’t have such a great impact,’ he said.

Asked if PRs should be restricted from buying in the resale market, Mr Mah said that was not the right thing to do.

PRs also need a place to live, he said, and the solution was to make a clear distinction between Singaporeans and PRs in terms of the grants they get.

A SHORT-TERM office site on Mohamed Sultan Road that the Government failed to sell two years ago has garnered renewed interest.

A developer has agreed to put in a bid of $9.33 million for the land – twice the offer that came in for the site in 2008.

The new bid for the 0.62ha spot has triggered a public tender that will start in two weeks’ time, the Urban Redevelopment Authority (URA) said yesterday. It did not identify the developer.

Located between Kim Yam Road and Martin Road, the site can host a four-storey building with a total floor area of almost 100,000 sq ft. It is being sold with a shorter-than-usual 15-year lease.

In August 2008, the URA put the site up for sale without waiting for a developer to make an offer. That was to ease a space crunch that was sending office prices soaring. But the financial crisis struck the next month, resulting in only one bid coming in, at $4.65million. The URA rejected the bid as too low.

Since then, the office market has slumped and is just starting to turn the corner. Prices rose 1 per cent in the final quarter of last year, the first increase in six quarters, according to URA data.

But property consultants do not see the fresh interest as a sign of brighter days for the market.

Mr Li Hiaw Ho, executive director of CBRE Research, said there is still more than ample supply of office space over the next few years, so the bidder for this site is more likely to be a company that needs office space rather than a developer anticipating an upturn in the market.

Separately, a housing site has also been put up for sale by its owners. Holland Hill Lodge, an 11-unit freehold development in Holland Hill, has been launched for collective sale.

The estate, built in the mid-1990s, sits on a 9,033 sq ft site with an existing gross floor area of 18,086 sq ft, said marketing agent Credo Real Estate yesterday. All the owners have agreed to the sale and are asking for $15 million to $16 million, or $1,038 to $1,107 per sq ft of gross floor area.

Source : Straits Times – 29 Jan 2010

WELLNESS provider Mary Chia is looking to move into the hotel business with the launch of a new integrated hotel and lifestyle centre.

The company has entered into a joint venture with businessman Lee Boon Leng, the son-in-law of executive chairman Mary Chia, to set up a firm called Hotel Culture.

It has paid $20 million for three properties on Mosque Street that will be converted into a combined hotel, lifestyle and wellness centre. There will also be a food and beverage business on the 21,399 sq ft site.

Mary Chia is slated to run the beauty, facial, spa and massage business, Mr Lee will be responsible for the food and beverage aspect, while a third party will be appointed to manage the hotel.

The 92-room integrated hotel, which is to emerge from the four-storey conservation shophouses, is expected to be completed by the third quarter of this year.

Mary Chia chief executive Wendy Ho said the property in the heart of the Chinatown heritage zone would charge between $150 and $180 per night and benefit from the tourist flow generated by the integrated resorts.

‘We are targeting people… who will enjoy all the spa, F&B and entertainment facilities combined with a boutique hotel stay,’ she added.

Ms Ho is bullish about her company’s investment, citing positive feedback from the surveys it has conducted.

The bulk of the $20 million bill for the property will be funded by $16 million worth of bank loans, with Mary Chia and Mr Lee extending another $3.5 million to Hotel Culture as shareholders’ loans.

The remaining $500,000 will come from the paid-up share capital of Mary Chia and Mr Lee’s stakes in the company.

Mary Chia paid $255,000 for its 51 per cent stake in Hotel Culture, while Mr Lee owns the remaining 245,000 shares. The loans extended are proportionate to their shareholdings.

Ms Ho said most of the firm’s investment would come from its initial public offering, which succeeded in raising $3.9 million last August.

‘We believe it is a worthwhile investment, and we will look into our costing,’ she said. The firm reported a net profit of $119,000 for the six months ended June last year.

Restaurant operator, Taste Paradise, which currently operates at two of the three units Hotel Culture is acquiring, has confirmed that it will be moving out.

Source : Straits Times – 29 Jan 2010

THE Law Ministry’s reply on Thursday (‘En bloc sale panels already have a lifespan’) to my letter on Monday (‘Save owners from sword of Damocles’) has not addressed the following problem.

As I understand it, a collective property sale expires one year after the first subsidiary proprietor has signed the collective sale agreement. However, until this signing process is triggered, a collective sale committee has, in legal fact, indefinite tenure.

Which means that even if it chooses to stay around for 20 years, legally there is no mechanism to disband it automatically.

The ministry suggests that the owners can do so by holding an annual general meeting (AGM) or extraordinary general meeting to do so. No doubt this is so. This means that those who oppose a collective sale must become active in collecting signatures and rally for votes.

My question is: Shouldn’t the law be refined to have an automatic mechanism to disband a sale committee, which has, after say 12 months, not even collected that first signature?

This is a loophole in the law which should be addressed. No committee should have carte blanche to exist indefinitely.

The law is clear on management councils. These must be dissolved and re-elected at an AGM and have a limited tenure of one year.

Why should collective sale committees be allowed to operate indefinitely unless they choose to dissolve themselves or are booted out?

In my condo, the collective sale committee is restarting the process after 27 months. One member has sold and others have moved out of their condo units.

More than 10 per cent of the residents are new owners. They did not vote in this committee.

Moreover, the agents say they need even more time to ‘evaluate’ the situation.

Unless legal deadlines are set, those who want to stay on live with this situation hanging over their heads. I hope the ministry will consider a revision of the rules.

Susan Prior (Ms)

Source : Straits Times – 29 Jan 2010

The Housing & Development Board (HDB) is checking to see if buyers are using its government-subsidised flats to speculate in the property market – even as resale flat prices hit a new high in the fourth quarter of 2009.

‘There are some people who are saying that people are buying HDB flats for speculation,’ said Minister for National Development Mah Bow Tan. ‘So let’s look at that, see whether it is really happening and if so, whether any of our rules are allowing it to happen.’

Speculation ’shouldn’t be’ taking place as HDB flats under the government’s home ownership programme are for people to live in, Mr Mah added. He was speaking to reporters on the sidelines of the International Housing Conference on Wednesday.

The minister has asked HDB to relook its rules to make sure that prices are not being artificially inflated. ‘I have asked HDB to review its rules and see whether there are any rules that are encouraging and allowing people to speculate in HDB flats,’ he said.

The move comes as HDB resale prices hit a new record 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.

Answering questions on whether HDB flats were still affordable, Mr Mah noted that the resale market should be allowed to operate as a free market, with prices set on a ‘willing buyer, willing seller’ basis. So if there is ‘genuine’ demand, prices will climb.

But he drew the line at speculation and stressed that public housing is for owner-occupation. He did not say which rules are being studied, but added that the review should be completed in a few months’ time.

Aside from reviewing regulations, Mr Mah said he has also asked HDB to step up enforcement. ‘I’ve asked HDB to also step up on any possible breaking of the rules. I don’t know if it’s extensive, but anecdotally you do hear of one or two cases,’ he added. ‘We want to make sure that this is not happening.’

Analysts BT spoke to said that there was little speculative activity in the HDB market – in the sense that few buyers are buying flats with the sole purpose of flipping them.

‘In my opinion, there is little or no speculative activity in the HDB market. I think the existing rules are relatively adequate,’ said PropNex Realty chief executive Mohamed Ismail.

Under existing rules, home buyers who receive a grant from HDB can sell their flats only after five years. Singaporeans who choose not to take up grants – as well as PRs who are not eligible for any grants – can sell their flats after a year if they have not received a loan from HDB.

However, there are concerns that people could be buying flats for rental investment. Recent media reports have suggested that some flat owners at the newly completed Pinnacle@Duxton have rented out their entire units without a minimum occupation period. This is illegal under HDB’s rules.

But market watchers pointed out that it will be difficult to check if an HDB flat is being occupied solely by renters.

Going forward, HDB will launch another 12,000 new flats this year as demand for public housing grows. Some 7,000 flats will be pushed out in just the first half of 2010.

‘So long as there is demand, so long as there is a genuine take-up rate, HDB will build,’ Mr Mah said.

Source : Business Times – 29 Jan 2010

THE home buying buzz continues at showflats. Allgreen Properties is said to have sold 54 units at its Holland Residences condo at Taman Warna released this week. The average price of the 68 units released in the 83-unit project is $1,625 per square foot; but the figure is weighed down by private enclosed spaces for ground-floor units in the five-storey freehold project.

Singaporeans bought 80 per cent of the units sold, says Joseph Tan, executive director at CB Richard Ellis, which is marketing the project.

In a more upscale location, a joint venture between BBR Holdings and SP Tao’s Shing Kwan Pte Ltd has sold seven of the total 16 units at its six-storey freehold 8 Nassim Hill project since last Friday. The development is expected to receive Temporary Occupation Permit at the end of March this year.

The project comprises eight townhouses and eight penthouses – all of them triplex units spanning across three levels. The townhouses occupy the project’s lower three levels and range from about 4,200 sq ft to 4,500 sq ft, while the penthouses, which are on the upper three storeys, are about 3,200 sq ft each. Each of the 16 units has its own swimming pool; each townhouse also has its own garden at the back.

The 16 units are priced between $3,100 psf and $3,400 psf or $11-14 million apiece. Singaporeans bought two of the seven units sold so far; the other five were picked up by foreigners – from Europe and Hong Kong.

In the Beach Road area, Hong Fok Corporation is said to have recently released upper-floor units at its 99-year leasehold Concourse Skyline priced at $2,200 psf to $2,400 psf. The 360-unit development reaches up to 43 storeys.

Over at Holland Residences, one-bedroom units (601 sq ft) and two bedders (ranging from 957 to 979 sq ft) were the first to be snapped up at this week’s preview.

The project also has three- and four-bedroom units as well as penthouses. Prices of one bedders start from $1.06 million. Two bedders cost between $1.63 million and $1.73 million. The most expensive units sold was $3.6 million for a four-bedroom duplex penthouse.

The average price of $1,600 psf for Holland Residences is higher than the $1,500 psf at which Ho Bee is selling its nearby Parvis, a 12-storey condo at Holland Hill.

However, there are no one-bedroom units in Parvis; developers typically can command a higher per square foot price for smallish units as the lumpsum amount is still relatively small.

Hence the tendency among some developers to build projects with a higher proportion of smallish units to achieve a higher overall average psf price for the development.

At a Knight Frank auction yesterday, a 1,206 sq ft unit on the 10th floor of Leedon 2 changed hands for $1.38 million or $1,144 psf. Leedon 2, a freehold development, is said to be more than 20 years old.

Source : Business Times – 29 Jan 2010