Developers from China are looking to break into the Singapore property sector by building mass market and mid-tier residential homes.

Observers said the new entrants want to diversify from their home market, while seeking opportunities in Singapore’s growing property sector.

Since late 2007, China-based developers have been trying to cut themselves a slice of the pie.

While they account for no more than 5 per cent of the market, market watchers said they have been gunning for land.

“The success rate has been quite low for them – about 20 per cent of the bids turn into a successful construction project for them. Nonetheless, of all the bids they have put in, about 13 or 45 per cent of those bids, are in the top three running order, so they are quite aggressive on that front,” said Chua Yang Liang, head of Research (SEA) at Jones Lang LaSalle.

Market watchers said China developers are most active in bidding for mass market residential sites – the market they are most familiar with.

And some with deep pockets bid aggressively – such as China Sonangol Land buying the Parisian site at Paterson Road in October last year for some S$283 million.

While margins for China developers are lower, at around 20 per cent compared to the 30 per cent they can find in their home market, observers said they are willing to sacrifice a little for diversification.

But analysts also warn that China players may not stick around if the market turns down.

“When you go into a market like Singapore where there are a lot of local players, that margin could slow down to some 10-12 percent. At some point in time, they might find that there might not be good opportunities here in Singapore,” said Donald Han, MD of Cushman & Wakefield.

Some observers said that more developers from China could mean more buyers from China.

Developers coming from the mainland could bring with them client lists for investors looking to buy into Singapore property.

Source : Channel NewsAsia – 27 May 2010

With first-quarter home sales rocketing to a higher-than-expected 4,446 units, property experts say that the strong sales momentum will probably spill over into the second quarter as developers plan more sizeable launches.

In fact, at least 12 developments have been identified by property consultants as possible launches this quarter.

These include Far East Organization’s 361-unit Waterfront Gold at Bedok Reservoir Road, Wing Tai Holdings’ 43-unit Le Nouvel Ardmore at Ardmore Park and KSH Holdings’ 250-unit Cityscape@Farrer Park.

The strong economic recovery and better employment prospects will continue to sustain demand, Knight Frank manager of consultancy and research Ong Kah Seng said.

This is especially so after the latest government announcement of stellar first-quarter 13.1 per cent growth for the economy year-on-year and its upward revision of full-year gross domestic product growth to 7 per cent to 9 per cent from the previous 4.5 per cent to 6.5 per cent, further contributing to positive market sentiments.

CB Richard Ellis (CBRE) residential executive director Joseph Tan added that with the coming months seeing more sizeable project launches in varying locations, there will be enough choices to continue drawing the interest of potential buyers.

Sales in the first quarter were dominated by units in the core central region, where prime and higher-end properties such as those in Cairnhill and Holland Road, or Sentosa, are located. They made up 44 per cent of total sales, according to CBRE.

The second quarter is also likely to see similar posh launches following a laggard performance of high-end residential properties in the past two years, experts say.

‘The launch and sales activity outside the central region (OCR) was buoyant in 2009 and a number of mass-market projects were launched last year. Hence fewer sites will be launched in the OCR area,’ Mr Ong said.

However, buyers can still expect to see mid-tier and mass-market launches this quarter, such as The Minton in Hougang Street 11 and UOL Group’s Terrene condominium.

CBRE’s Mr Tan noted that more than 500 units of UOL Group’s 616-unit Waterbank at Dakota had been sold in the two weeks since its preview early this month.

Ms Christine Sun, Savills Singapore’s senior manager of research and consultancy, pointed out that buying interest had remained strong despite recent anti-speculation measures.

‘The residential market is likely to perform as well moving forward, especially over the next few months as developers push out new launches to ride on the current sentiment and buyers race to lock in the lower borrowing rates ahead of the expected interest rate revision by the second half of this year,’ she added.

Home sales of 4,446 units in the first quarter were more than double the 1,860 units sold in the previous quarter and 67 per cent more than sales in the same period last year.

If the pace continues throughout the year, total sales of new homes could be comparable to last year’s volume of 14,688 units, property experts say.

Home hunters, however, will be pleased to note that with the Government’s close monitoring, most experts do not expect prices to spiral upwards rapidly.

Although Knight Frank’s Mr Ong expects to see high-end residential properties receiving strong buying interest and enjoying a higher price increase, any rise is likely to be ‘incremental and sustainable’.

He said: ‘The overall interest for high-end residential properties will be underpinned by sound economic fundamentals and buyers who carefully evaluated the investment potential of high-end residential properties.

‘The integrated resorts can enhance the international exposure and familiarity of Singapore, and provide further opportunities for owners and sellers of high-end residential properties.’

Savills’ Ms Sun said prices are likely to see moderate rises only.

She expects a 10 per cent to 15 per cent increase in the high-end market and a 5 per cent to 10 per cent increase in prices for the mid-tier and mass markets after their strong run last year.

Source : AsiaOne – 27 Apr 2010

LICENSED moneylenders who exploit HDB resellers are advised to curb their activities: The Ministry for National Development (MND) is keeping a close watch on you.

In Parliament yesterday, National Development Minister Mah Bow Tan said: “HDB flats are not meant for short-term profit-taking. They are not meant to be used as collateral for loans, whether to legal or illegal moneylenders.”

He was referring to the unscrupulous practice whereby credit companies work with real- estate agents who connect them with homeowners – for a fee.

A legal loophole allows moneylenders to file a caveat on a flat, which means that they get first bite of profits when the flat is sold.

Mr Mah added that existing measures are inadequate to deal with the problem. He was responding to questions from Madam Halimah Yacob (Jurong GRC), who asked about the MND’s move to regulate real- estate agents more tightly.

Since 2007, the Inland Revenue Authority of Singapore, which licenses real-estate agencies, has received a total of 154 complaints against errant agents.

The MND is also considering “strengthening the regulatory framework…and to raise professional standards in the industry”, the elements of which will be announced “shortly”, said Mr Mah.

However, Madam Halimah pointed out one major loophole which may prevent errant agents from being reported.

“If you are the real-estate agency, I think there will be less reason for you to find fault with your own agents, because that will affect your name.”

Source : AsiaOne – 28 Apr 2010

The government is taking a “fundamental re-look” at the entire real estate industry.

Speaking in Parliament, National Development Minister Mah Bow Tan said this includes strengthening measures to curb unscrupulous practices and abuses.

Among the measures, the government plans to plug a loop hole on using public housing flats as collateral for loans.

Public housing flats are not meant to be used as security for any loans other than the mortgage to finance the unit’s purchase.

Yet, Parliament was told that some owners have fallen prey to such abuses.

“One current practice that is very common is that of credit companies filing caveats against HDB flat owners who had borrowed money from them at very high interest rates, so that when these HDB owners sell their flats, the credit card companies will get the first bite,” said Halimah Yacob, Member of Parliament (MP) for Jurong GRC.

In response, the National Development Minister said the government is working to plug the loophole.

“Unfortunately there has been a loop hole that has allowed legal money lenders to lodge such caveats, that is the reason why my ministry is now looking at how we can prevent this from happening,” said Mr Mah.

“This is going to be done even before the regulations for the real estate agents are finalised. I am treating it as a matter of urgency because it is obvious there have been cases of abuses, people have been exploited, and in this regard the role of some rogue estate agents should also be examined.

“We have received feedback that some moneylenders provide loans on the condition that the borrowers repay the loans from the sales proceeds of their HDB flats. We are currently working with the relevant authorities on appropriate measures to curb such abuses.

Complaints against real estate agents have risen in the past few years, according to figures from the Consumers Association of Singapore.

There were 1,079 cases last year, higher than 1,100 complaints in 2008 and 1,055 in 2007.

Meanwhile, the Inland Revenue Authority of Singapore, which is the licensing body for real estate agencies, received 154 complaints against agents in the past three years.

Mr Mah said existing rules are not enough to deal with potential abuses by errant property agents. He added that the industry needs to be better regulated, especially in the current climate where there are temptations for some agents to take short-cuts.

He said: “We are looking into whether we should have a more formal form of registration for real estate agents, what are the mediation avenues available, if not what are the dispute resolutions mechanisms available and if not what are the punishments that can be meted out to those who flout the rules.”

A new regulatory framework is expected to be announced shortly.

Source : Channel NewsAsia – 28 Apr 2010

While the market mulls over the impact that rule changes will have on collective sales, the spotlight has fallen on developers sitting on prime sites acquired during the previous en bloc boom in 2006-2007.

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If the proposed changes make it tougher for prime freehold residential sites to make their way to the market, that will be good news to developers who are already holding such sites acquired earlier.

A compilation by property consultant CB Richard Ellis shows that developers currently have 26 sites in prime districts 9, 10 and 11 snapped up in collective sales in 2006 and 2007 where new projects are still to be launched.

These sites are planned for redevelopment into nearly 4,300 new homes. Outside the prime districts, developers could build a further 4,700 homes on 16 sites purchased through collective sales in 2006-2007

CapitaLand, City Developments Ltd (CDL), Wing Tai, GuocoLand and Overseas Union Enterprise are among the developers who bought prime district en bloc sale plots earlier. For instance, CapitaLand, together with its partners, acquired the Farrer Court plot and is planning a 1,715-unit redevelopment project. Hong Leong Group (including CDL) has exposure to six sites slated for development into over 600 units in locations like Leonie Hill, Anderson and Thomson roads.

These sites and projects will become more precious to developers and they will want to time their launch more judiciously if it gets tougher to replenish landbank in this segment through en bloc sales, say industry observers.

CB Richard Ellis executive director Jeremy Lake says: ‘The proposed amendments are unlikely to facilitate the en bloc process significantly and as such, the number of collective sales coming to the market is likely to remain relatively limited.

‘From a developer’s point of view, it will be more difficult to replace landbank in prime areas so those who have such sites may think more carefully about the timing of launch of new projects on these sites as it will not be easy to find replacement land.’

Giving a more pessimistic take, a developer said: ‘I don’t think anyone would be too far wrong to say that en bloc sales are just about the only source of supply for prime district freehold sites. The proposed amendments to the Land Titles (Strata) Act will put the ‘last nail in the coffin’ for en bloc sales in the near future, and the market will be completely dried up for freehold District 9, 10, 11 land supply.’

This will create upward pressure on land prices, he added.

Putting things in perspective, DTZ senior director (investment sales) Shaun Poh says: ‘En bloc sales in many developments have already been activated and these are unlikely to be affected by the proposed amendments. The supply from this source should be enough for the market for the time being.

‘However, the future pipeline of en bloc sales will be affected.’

On Monday, the Ministry of Law released proposed amendments that will among other things make it harder to restart a collective sale within two years of a failed attempt. Any attempts to convene EGMs to appoint a sales committee during this period will require higher requisition levels from owners – 50 per cent by share value or total number of owners for the first re-try and 80 per cent for any subsequent attempts.

‘Already it’s not easy to secure requisitions for EGMs based on existing thresholds of 20 per cent by share value or 25 per cent of number of owners,’ says DTZ’s Mr Poh.

‘Now that they’re proposing to raise the threshold for restarting previously failed en bloc attempts, it’s going to be more difficult for those who want to have another shot when, say, the market suddenly turns hot.’

On a more positive note, Credo Real Estate managing director Karamjit Singh notes that the instances of failed attempts that will be affected by the two-year restriction do not cover cases where owners’ 80 or 90 per cent majority consent was secured but the Collective Sales Agreement (CSA) expired because a buyer could not be found in time.

‘The projects that may be affected are likely to be those that had attempted an en bloc sale when they should not have, either owing to the project not being fundamentally ‘enblocable’ or the market was not on their side to an extent that the majority owners rejected the proposal,’ he said.
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MinLaw hopes its proposal will discourage repeated attempts at en bloc sales where there isn’t enough support from owners.

Industry players lauded MinLaw’s proposal to streamline the number of EGMs, which should speed up the process. ‘We expect to see further en-bloc activity this year,’ said Chris Fossick, managing director Singapore and South East Asia for Jones Lang LaSalle.

Others, however, complain that the the ministry is not doing anything to mitigate bottlenecks caused by the need to have lawyers witness signing of the CSA.

This has also jacked up legal costs. Some have suggested doing away with this requirement since those who sign are given a five-day cooling-off period.

Source : AsiaOne – 1 May 2010

The buzz of excitement at the Marina Bay area with the opening of the US$5.5 billion ($7.5 billion) Marina Bay Sands integrated resort (IR) on April 27 is resulting in a pick-up in sales activity at the neighbouring Marina Bay Residences. The 55-storey, 428-unit upscale condominium tower is expected to be completed soon.

Prices at the 99-year leasehold high-end condo are fast approaching 2007 peak levels. Most recently, a 2,368 sq ft apartment on the 30th floor changed hands for $8.288 million, or $3,500 sq ft. The last time it hit such levels was in mid-June 2007, when a 4,489 sq ft unit on the 51st floor was sold in a sub-sale for $16.16 million, or $3,600 psf.

From March 30 to April 6, there were four transactions in the $2,531 to $3,049 psf range — the first time prices have breached $3,000 psf since December 2007, when a unit on the 25th floor changed hands for $3,080 psf.

Marina Bay Residences, next to The Sail @ Marina Bay, is one of the most actively traded properties in Singapore. The high of $3,049 psf was achieved for a 1,969 sq ft unit on the 30th floor. It was sold for $6 million, according to a March 30 caveat lodged with URA. The previous owner had purchased the unit in a sub-sale for $5.3 million, or $2,700 psf, in June 2007.

The most recent transaction at Marina Bay Residences was for a 1,055 sq ft unit on the 41st floor, which changed hands in a subsale for $2.986 million, or $2,830 psf, according to an April 5 caveat with URA. The apartment was sold in July 2007 for $2.405 million ($2,280 psf), hence the owner saw a gain of 24%.

Meanwhile, another unit, a 1,216 sq ft apartment on the 22nd floor, was sold for $3.49 million, or $2,869 psf, in a sub-sale, according to an April 5 caveat. The unit last changed hands in July 2007 for $2.86 million ($2,349 psf), hence there was a capital appreciation of 22%.

On the 14th floor, a 1,065 sq ft unit was sold for $2.7 million, or $2,531 psf, translating into a 47% gain for the previous owner, who acquired it for $1.83 million, or $1,720 psf, in January 2007. The unit was sold for $1.558 million, or $1,462 psf, in 2006, representing a 17.4% gain.

Beyond the opening of the IR, Marina Bay Residences is also seeing renewed investor interest as the second condo tower, Marina Bay Suites, is likely to release its second phase of units for sale over the next one to two weeks.

Last November, the developers had released around 90 units at Marina Bay Suites in a private preview at prices ranging from $2,200 to $2,500 psf. Another 130 units could be released in the upcoming second phase preview of the 66-storey, 221- unit Marina Bay Suites, which is said to be a more upscale version of Marina Bay Residences.

The pricing this time around will be guided by the transactions of properties in the vicinity, notes Joseph Tan, CBRE executive director for residential services. The remaining units are mostly on the higher floors and likely to fetch a higher price than those released in November, he adds. The project is expected to be completed in 2014.

At the 1,111-unit The Sail @ Marina Bay, two units changed hands for prices above $3,000 psf this year. The units were on the 58th floor of Tower 2. One was an 883 sqft apartment that sold for $2.69 million ($3,048 psf) on Feb 1, according to a caveat lodged with URA. The other was a 936 sq ft apartment that changed hands for $3 million, or $3,204 psf, in late January. From March 30 to April 6, there were three transactions, with prices ranging from $1,870 to $2,646 psf. The Sail @ Marina Bay, which was developed jointly by City Developments Ltd and AIG Real Estate and completed in 4Q2008, hit a high of $3,387 psf in 2008, when a 1,033 sqft unit was sold for $3.5 million.

Several properties sold at Marina Bay Residences are said to have hit prices above $3,000 psf, although the caveats have yet to be lodged. As the opening of the IR draws near, attention is returning to properties in the Marina Bay area like Marina Bay Residences, and it looks like prices are on an upward trend.

Source : The Edge – 29 Apr 2010