ALTHOUGH it was not directly addressed in Budget 2010, worries about the cost of housing in Singapore were reflected in several MPs’ speeches yesterday.

There were calls to review housing policies, including current rules that allow private property owners to buy HDB flats and to sublet them.

It was also suggested that the $8,000 household income ceiling be raised to allow more Singaporeans to buy new subsidised flats (that are not executive condominiums) from the Housing Board.

The growing number of new immigrants in recent years has caused not just a squeeze on jobs, but also on transport and housing, said MPs.

Mr Inderjit Singh (Ang Mo Kio GRC) said: ‘By bringing in too many people too quickly…the cost of living has gone up rapidly. The clearest manifestation of this is the cost of HDB flats.’

He said though permanent residents (PRs) cannot buy new flats, they still indirectly inflate prices. This is because demand by PRs in the resale market can push up prices, and the price of new HDB flats is pegged to the resale market.

There are also many PRs who rent HDB flats and this contributes to the upward pressure on flat prices, he added.

HDB resale prices have risen about 40 per cent in the past three years, far outstripping Singapore’s economic growth.

The Ministry of National Development has maintained that PRs, who make up only one in five resale flat buyers, have minimal impact on resale prices.

Yesterday’s debate also saw Dr Ahmad Magad (Pasir Ris-Punggol GRC) raise concerns on the effectiveness of recent measures to curb property speculation.

Three days before the Budget statement on Feb 22, the Government announced new rules: A property buyer has to pay extra stamp duty if he sells the property within a year; and the amount buyers can borrow from lending institutions was reduced from 90 per cent to 80 per cent of the property’s value.

Despite these measures, people are still thronging showrooms and snapping up properties, said Dr Ahmad.

He was particularly concerned about the policy that allows private property owners to own HDB flats as well. While the policy says they must live in the flats, anecdotal evidence shows many do not, and are renting them out. ‘If no stern action is taken, it will encourage more dual property owners to do the same,’ he said.

Mr Sin Boon Ann (Tampines GRC) wants the Government to review the income ceiling for a group of young Singaporeans – graduates who have worked a few years before deciding to settle down – struggling to buy a new HDB flat.

He argued that not all couples whose incomes exceed the current limit can afford private housing, or have enough cash to meet the down payment for a pricier resale HDB flat from the secondary market.

National Development Minister Mah Bow Tan said recently the Government was looking into measures for the HDB market and that announcements would be made in Parliament some time this week or the next.

Source : Straits Times – 3 Mar 2010

IDA said to have leased 160,000 sq ft; rents may inch up as banks expand in prime areas

The upswing in office leasing deals that started around July last year shows no signs of letting up. The healthy demand has persuaded some property consultants that rents for the best quality space in Singapore’s financial district could be close to their bottom and poised to perk up.

The Infocomm Development Authority (IDA) is understood to have inked a lease for about 160,000 square feet at Mapletree Business City on Pasir Panjang Road.

This is said to be spread over six floors in the 18-storey office tower of the development, which is expected to receive Temporary Occupation Permit (TOP) soon. With IDA secured as a tenant, the tower’s 436,300 sq ft net lettable space is now fully leased, BT understands. The project is near Labrador Park MRT Station, which opens next year.

IDA is expected to move out of Suntec City, where its lease is said to be expiring next year.

Barclays Capital, which has leased 100,000 sq ft at Marina Bay Financial Centre’s Tower 2, is said to be close to inking a deal for another 250,000 sq ft in the same tower, which is expected to receive TOP next quarter. The bank is expected to exit from Atrium @ Orchard.

Barclays also occupies about 100,000 sq ft at One Raffles Quay’s South Tower and its retail bank has a technology centre at Eightrium @ Changi Business Park. The bank’s headcount in Singapore has increased from just several hundred people in 2004 to over 3,500 currently. Of these, about 2,000 are employed at Barclays Capital Global Support Hub.

As new office projects are rolled out, big tenants such as banks are being offered more choices. For instance, ANZ, which is currently at OUB Centre at 1 Raffles Place, is said to be deciding whether to move to the new tower being built in the same development, or to Ocean Financial Centre along Collyer Quay.

The latter, a 43-storey development under construction that will have about 850,000 sq ft net lettable area, is also said to have attracted some tenants from Ocean Towers next door. These include Ifast, Verizon Communications and DMG & Partners Securities.

Other tenants at Ocean Financial Centre are said to include Stamford Law Corporation, which is currently in Republic Plaza, and serviced office operator The Executive Centre.

Colliers International executive director Calvin Yeo said: ‘We are starting to see our clients, who are MNCs including financial institutions, planning for expansion as their existing leases approach expiry.’

While some of the initial buzz in the office leasing market was a game of musical chairs involving relocating from older buildings to newer properties, the market is now starting to move beyond replacement demand to actual expansion or new demand, say market watchers.

‘We’re seeing quite a few law firms from Europe coming to Singapore as well as existing law firms in Singapore expanding,’ says Jones Lang LaSalle regional director and head of markets Chris Archibold.

‘Insurance companies are starting to look at headcount growth of about 5 per cent this year followed by a further 5-10 per cent per annum for the next few years. Banks are boosting their headcount, not just for private banking but across the board. We’re seeing a number of them bringing high-end back-office support functions again to Singapore,’ he added.

Mr Archibold reckons that for international standard prime Grade A offices in the Raffles Place and Marina Bay area, rents will probably bottom out at their current levels of about $8 psf a month for smaller occupiers and $7 psf for bigger occupiers. These levels are about 58 per cent below the Q3 2008 peak figures. ‘However, rents for A- and B+ grade offices may still decline a few per cent from current levels though the drop should end by Q4 2010.’

Another office property consultant also said that office landlords are more confident and not prepared to discount rents any further. ‘But older buildings may relatively underperform and that means rentals in even good-quality buildings may not rebound quickly until space availability in new developments tightens,’ he added.

Others are more optimistic. UBS has predicted a 30 per cent jump in the average monthly Grade A office rental value from $8.10 psf at the end of last year to $10.60 psf at end-2010, citing growth in demand. The impact of new office completions is not likely to be as grave as feared earlier since some one million sq ft of existing office stock is expected to be removed in 2010-2011 for conversion to residential use.

Source : Business Times – 3 Mar 20108 psf a month for smaller occupiers and $7 psf for bigger occupiers. These levels are about 58 per cent below the Q3 2008 peak f

THE Straits Trading Company (STC) is taking over a private developer and its cluster bungalow project at Chancery Lane.

It said on Monday that it would pay an aggregate of some $13.9 million for the proposed acquisition of Tertius Development Pte Ltd, including the assignment of specified shareholders’ loans. The vendors are two individuals.

With the deal, STC will gain control of Chancery Five, a project with 12 freehold strata bungalows at 5 Chancery Lane. The development is next to Anglo-Chinese School (Primary) and Anglo-Chinese School (Barker Road).

Each bungalow will have five rooms, an entertainment room, an attic, a private basement car park, a private swimming pool and a lift spread across two levels. The homes will range from 4,800 square feet to 6,500 sq ft in size.

Tertius’ commitment to the project – including land cost, development cost and incidental selling costs – up to 2012 is estimated by the purchaser at about $58.24 million.

Eric Teng, chief executive of STC’s property arm, told BT that his unit has been looking out for opportunities in the property market. He has not set a date for the launch of Chancery Five. The project is under construction and could obtain temporary occupation permit in April next year.

According to caveats lodged with the Urban Redevelopment Authority, a detached house at Chancery Lane changed hands at $900 per sq ft in November last year.

STC’s acquisition is expected to be completed in April. The company does not foresee the purchase having a significant impact on its financial position for the year ending Dec 31, 2010.

STC shares rose five cents yesterday to close at $4.15.

Source : Business Times – 3 Mar 2010