When the most recent set of property cooling measures were announced in mid-January, many people expected a knee-jerk reaction even if a few felt the new rules were benign. Others feared the worst.

It has been more than two months since the measures came into effect and we have had more statistics to mull over.

The NUS recently released its February estimates. Prices for completed apartments recorded a marginal drop of 0.4 per cent but January’s performance was revised upwards from 2.6 per cent to 2.9 per cent, meaning that the second half of the month actually did better than the first.

Even the 0.4-per-cent drop in February was achieved after netting off the 1-per-cent rise in central from the 1.5-per-cent fall in non-central locations.

The decline in sales was also not sharp enough. It is not clear if it was seasonal or a direct result of the measures. These are all ambiguous signals – not quite the knee-jerk reaction but more like a quiet time for reflection.

More statistics will be released this afternoon. Hopefully, they will provide more clarity.

On hindsight, terms that were initially used to describe the cooling measures such as “overkill” or likening the measures to “using a sledgehammer to swat a fly” now seem overdone.

Nevertheless, while the market has proved resilient, it does not mean there has been no impact.

The effectiveness of a measure is dependent on how well it has met its objectives, while its impact includes other outcomes not intended as well.

While the market has not keeled over, it has certainly been bruised. There may be some internal haemorrhaging. If it does not heal, it tends to flare up in the most unexpected of times.

Many people say when trouble comes, it comes in waves and not singly.

With respect to the cooling measures, if it has not achieved its objectives by now, it never will. If the market were to be shaken now, it is most likely to due to other circumstances rather the measures themselves.

On a separate issue, many feel that the most useful proposal under the new rules to make timely and accurate information available to home seekers is the release of price lists two days before project launch.

You would expect such comments from investors, not so genuine home buyers for whom the rules are actually meant to protect. An investor would want to view the entire list to see which units give better value.

Unfortunately, pricing strategy is the marketers’ key weapon and rice bowl. You can be sure marketing agents will find a way around this rule.

What would be really useful to home buyers is the standard template that will state how much space areas like balconies, planter boxes and bay windows each occupy within the flat.

Buyers will now be able to do a like-for-like comparison only on areas important to them and assess which property is better for their needs

Let us not restrict this information to the first buyer but subsequent ones as well. It will be good if such data is carried in title deeds or official documents.

By Colin Tan – head of research and consultancy at Chesterton Suntec International

With a track record of developing quality residential projects in Japan, MEC is one of Japan’s largest and leading real estate companies.

It develops and owns more than 30 prime office buildings in Marunouchi, Tokyo’s premium central business district, including the Marunouchi Park Building which features cutting-edge office space and superior specifications.

The MEA will take a 25 per cent equity stake in the Bishan condominium project through a shareholders’ agreement, while CapitaLand Residential Singapore, a unit of CapitaLand, will hold the remaining 75 per cent equity stake in the project.

CapitaLand will be the lead development manager for the project, responsible for the full spectrum of sales and marketing, product design and development, and project management.

CapitaLand had acquired the residential site in Bishan Central for S$550.1 million through a government land sales tender in February this year.

Located in central Singapore, the 129,137 sq ft site has an estimated gross floor area of about 632,770 sq ft.

Mr Wong Heang Fine, CEO of CapitaLand Residential Singapore, said: “Design and development works are in progress and we target to launch the homes in the first half of 2012.”

On Wednesday, three Hong Leong group of companies including TID which is a joint venture between Mitsui Fudosan, Japan’s largest listed developer and Hong Leong Holdings, put in the highest bid for a residential site along Bartley Road and Lorong How Sun.

The top bid of S$413.27 million or S$621 psf/plot ratio is said to translate to a breakeven cost of S$1,000 psf-S$1,050 psf.

Source : Today

It said monthly rents for prime Orchard Road averaged S$30.10 psf per month in the first quarter, reflecting a decrease of 0.5 per cent from a quarter ago. Prime suburban rents remained at S$29.10 psf per month, unchanged from the previous quarter.

A few major leasing deals were concluded in the quarter as well as the exit of an anchor tenant along Orchard Road.

Knightsbridge announced that it is fully – let as it secured Abercrombie & Fitch for 21,000 sq ft of multi-level space. This store, which will open in Q3 2011, will be the second largest flagship in Singapore after H&M’s 32,300 sq ft outlet at Orchard Building.

A new-to-market American ice cream chain, Cold Stone Creamery, opened a 1,300 sq ft outlet at Orchard Central. The 52-seat flagship store features an open kitchen concept.

Ms Letty Lee, director of retail services, said: “It is likely that prime retail rents along Orchard Road would continue to soften in the near- to-medium term as recent completions along Orchard Road have not been digested and rental re-negotiations at some of these malls are imminent.”

CBRE said the retail investment market remained strong, with 80 caveats lodged from Jan 1 until the first week of last month. Although not all the caveats for the quarter have been registered, the current tally has exceeded the volume of 75 caveats lodged in Q1 2010.

PoMo, previously known as ParadizCentre, was sold to CLSA for S$255 million, reflecting an average S$1,400 psf over the entire net lettable area (NLA) of the development which comprises retail, office as well as civic and cultural space.

CapitaMall Trust bought Iluma from Jack Investment at S$295 million or S$1,593 psf based on a NLA of 185,190 sq ft.

The investment transaction that commanded the highest quantum in Q1 2011 was the sale of the Lion City Hotel and the adjoining Hollywood Theatre site at S$313 million. The buyer, UOL Group, is waiting for approval to either develop the site into a mixed residential and commercial complex or a residential development with commercial element on the first storey.

Raffles Medical Group (RMG) bought a seven-storey freehold podium block at Thong Sia Building for S$92.08 million in February. This reflected S$2,158 psf based on a strata floor area of 42,668 sq ft.

It would be interesting to follow the development of this area, marked by Parkway’s Mount Elizabeth Hospital and Medical Centre, RMG’s new medical centre at Bideford Road and a multi-tenanted Paragon Medical above the Paragon mall.

Currently, the area is already a vibrant medical hub, very accessible to patients residing in the surrounding districts of nine, 10 and 11.

Ms Lee said: “With improving macroeconomic conditions in the region contributing to a recovery in foreign patient arrivals, this medical cluster is likely to thrive, catering to a niche group of customers who seek medical treatment in an alternative country”.

Source : Today

The commercial brokerage firm said the significant decline in Q1 sales value can be attributed to dampened sentiment in the residential sector, as a result of the government’s cooling measures.

“The introduction of the cooling measures in January this year — deemed the stiffest the market has ever seen — has led to a 38 percent year-on-year dip in auction sales value, while the lack of high-value transactions contributed to the steep 66 percent quarter-on-quarter fall in sales value,” said Grace Ng, Deputy Managing Director at Colliers.

The figure in the first quarter was the lowest sales value recorded since the Singapore auction market rebounded in Q1 2009, after the global economic crisis. In contrast, there were S$80.6 million worth of propertiessold at the auctions in Q4 2010.

Of the 17 properties sold in Q1, six were industrial properties worth S$4.2 million, five were retail properties worth S$7.6 million, five were residential properties worth S$11.1 million and one was a development site worth S$5 million.

There is now a “stalemate” in the private home sales market, said Colliers.

Q1 sale of private residential properties at auctions was very low, compared to the 13 transactions worth S$23.1 million recorded in Q1 2010 and eight transactions worth S$41.6 million in Q4 2010.

Ms. Ng said there were constant offers for private residential properties but the offers were below the sellers’ asking prices.

“Sellers backed by strong holding power chose to remain firm in their stance even though the offered prices are only five to eight percent below the asking,” said Ms. Ng.

“A stalemate between buyers and sellers was observed and this was particularly so in the secondary market.”

The developer had submitted the highest tender price of S$170.1 million out of the six bids for the site that is proposed for executive condominium (EC) housing.

The 17,590 square metre site was launched for sale on January 21 and closed on March 22.

The 99-year leasehold site has a maximum gross floor area of about 49,250 square metres, which could yield around 490 housing units.

The S$170.1 million tender price reflects S$321 per square foot (psf) per plot ratio and translates to a breakeven cost of about S$650 psf.

CBRE Research had said the new EC project could likely fetch around S$700 psf on average.

Source : Channel NewsAsia

Singapore’s resale capital values rose in the first quarter of the year, although more upward pressure was seen outside the prime districts in the Central and East Coast areas, according to preliminary estimates released by Jones Lang LaSalle (JLL).

According to the global real estate services firm, capital values in the Central and East Coast regions rose between 2.0 and 2.5 percent quarter-on-quarter, echoing the observations seen in the National University of Singapore (NUS) Housing Index. Average non-prime capital values are now at a record S$1,043 psf, exceeding the previous high of S$1,020 psf achieved in Q4 last year.

However, luxury prime properties saw only a 0.7 percent quarter-on-quarter growth in rental values, as leasing demand softened in the first quarter. Smaller units were the key factor behind this, with both two- and three-bedroom units seeing rental values soften over the quarter.

Meanwhile, four-bedroom units in the prime districts remain in demand and were the only type of homes to see an increase in rental values this quarter.

“The preference of the expatriate community is for larger four-bedroom apartments of at least 2,800 sq ft. The smaller size units are not particularly attractive as the majority of middle- and upper-management families relocating prefer spacious four-bedroom units that come with entertainment areas,” said Jacqueline Wong, Head of Residential at JLL.

“Going forward, we think this trend is likely to sustain and we will continue to see disparity in the housing market, where small-size leasing stock continues to face downward pressure, while larger units continue to see (an) upside”.

Based on caveats lodged, buyers from the Asia-Pacific region continue to dominate prime market sales, with Chinese, Indonesian and Malaysian buyers purchasing more than 50 percent of the units sold in the primemarket in the first quarter.

The largest proportion of sales of prime residential units went to Indonesian buyers, contributing 24 percent of the total units sold. This was followed by Chinese and Malaysian buyers, acquiring 16 percent and 14 percent of prime residential units respectively.

Indeed, Chinese buyers were second only to Singaporeans in terms of the total number of units acquired in the first quarter. Nearly 241 units were sold to Chinese buyers, of which 63 percent were located in the mass marketand priced at between S$500,000 and S$1.5 million.

“The surge in Chinese buyers in Singapore coincided with the policy tightening in China,” said Dr. Chua Yang Liang.

“While we do not expect a repeat of what is observed this past quarter, we can expect the number of Chinese buyers to continue at a healthy level as seen in previous quarters, as the fiscal and monetary policy in China remains conducive to overseas investment by the wealthier Chinese.”

DESPITE the Government’s cooling measures, some introduced last year and some this year, there is still a keen interest among property investors to park their dollars in residential units in Singapore.

One option is to buy a unit that is already tenanted, which offers the investor an almost immediate rental return.

A Far East Organization spokesman told tabla! that rental returns in Singapore can range from 3.6 to 3.9 per cent depending on the location of the property and its amenities. Some of its popular projects like Rafflesia, Meadowlodge, The Bayshore, Laguna Green and Dunman View have a high rental yield.

The Bayshore, a 99-year leasehold property which is popular among Indianexpatriates, is considered by property agents to be a “rental gem” as tenants are drawn quickly by its location – it provides easy access to the city as well as the airport – and the panoramic sea and city views.

Rents in The Bayshore can range from $3,000 a month for a one- or two-bedroom apartment to about $8,000 a month for a penthouse. Completed in 1997, the development won the International Real Estate Federation (FIABCI) Prix d’Excellence Award in 1999.

Credo Real Estate’s executive director Ong Teck Hui told tabla! that investors seeking to buy tenanted units would have to consider several things.

One, whether it is an attractive rent and, in cases where the lease has been renewed recently, if the rent is “locked in” for the next two or three years.

“If the rent is below market, whether there is an opportunity for renewal soon to raise it to market rates… those are some of the things to consider,” said Mr Ong.

Two, the condition of the unit and the building in which it is located. A need to renovate the unit to keep it in good tenantable condition or to contribute to the building’s upgrading will add to the investor’s expenses.

Mr Ong added that under current buoyant market conditions, asking prices tend to be high resulting in “yield compression”.

“Investors could accept lower yields if they are compensated by adequate capital appreciation in order to achieve an acceptable total return. Ideally, investing in the early part of the market up-cycle would provide the investor growing income return and a good upside in capital gains,” he said.

Mr Ong cautioned that this investment becomes harder to achieve at the upper end of the market cycle when both rental growth and capital upside are limited and downside risks increase: “The investor will have to adopt a longer term view if he invests at this stage.”

Some property developers, Far East Organization is one of them, offer rental guarantees: They help the buyer secure a tenant and try to ensure a minimum pre-determined rental yield.

Far East, which offers a guaranteed rental of 4 per cent per annum for two years, introduced the scheme in 2006 to help its investment buyers lease their properties as they didn’t have time to handle it themselves.

The property giant’s spokesman said: “With the home loan interest rates being low and inflation at an all-time high, the rental guarantee package is even more attractive.”

She added that with banks offering floating interest rates as low as 1 to 1.25 per cent for three years, Far East has a special tie-up with some banks which offer these attractive rates until the end of March.

The NUS Private Residential Price Index, which tracks month-on-month price movements of private, non-landed residential properties, fell 0.4 per cent compared with January, with prices in non-central areas falling 1.5 per cent. Prices of central area properties, however, continued to gain, rising by 1 per cent.

Analysts said the fall, although small, does show some impact of the cooling measures.

Mr Liang Thow Ming, head of residential services at Credo Real Estate, said that the overall decline was too marginal to confirm a trend. “But in a way, it does suggest that the market has taken a breather, as compared to how it was behaving last year and in January this year,” he said.

The cooling measures announced in January, included higher stamp duties for sellers and a reduction in the amount of credit available to those who already have outstanding mortgages.

Meanwhile, real estate services firm DTZ pointed out that prices of prime and suburban resale homes continued to rise in the first quarter, but at a more moderate pace, while luxury resale home prices remained unchanged.

According to DTZ, the average resale price of leasehold condominiums in suburban areas inched upwards by 0.8 per cent to S$665 per sq ft, while average resale prices of freehold non-landed condominiums in price districts grew 0.4 per cent on quarter to S$1,525 per sq ft.

Luxury condominiums in prime areas remained unchanged at an average of S$2,630 per square foot for the second consecutive quarter, DTZ said.

Ms Chua Chor Hoon, head of DTZ South East Asia Research, said: “We expect the pace of increase in prices to continue to slow down and plateau. There is more uncertainty this year, not just from the possibility of more cooling measures, but also from the recent regional events in the Middle East and Japan, the full impact of which are still not known.”

Source : Today

In Singapore, a Good Class Bungalow (GCBs) is uncommon but even less ordinary is the story of Mr. George Lim, who has become a prime developer of these high-class homes.

Since 2006, Mr. Lim, 59, has redeveloped and sold seven bungalows, worth a total of S$145 million.

Recently, he made the headlines after paying S$61.4 million for a 41,852 sq ft site in Leedon Park. Following his typical strategy, he will demolish the bungalow and redevelop the area with two GCBs.

Mr. Lim maintains that his venture into property was not planned but “happened along the way”, after he sold his engineering firm for approximately S$12 million, which helped him purchase an S$18 million bungalow in Belmont Road. He stayed there for three years before subdividing the 48,000 sq ft plot and building three houses— which were sold for a total of S$33 million in 2006.

Mr. Lim noted that his confidence in home value is based on land scarcity.

“My father bought our first house in Kembangan for S$12,000, improved on it, and sold it for more than S$60,000 after 10 years… I look at this and see that property investment has fantastic growth. There’s no way you can put money into a savings account and get those kind of returns.”

Mr. Lim owns three other GCBs, located in Binjai Park, Second Avenue and Leedon Park. All three houses will receive a green mark rating, as he plans to build homes which include environmentally friendly features, such as solar panels.

The bungalows in Leedon Park and Binjai Park are scheduled to be launched in June. Mr. Lim expects to sell them for more than S$40 million each, a new unit price record of approximately S$2,500 psf.

His success, however, is also coupled with risks. Mr. Lim revealed that he is 50 percent leveraged based on the property costs.

Mr. Lim believes that the current measures, such as higher sellers’ stamp duties (SSD) are not an issue in this market. He is confident that demand will continue to increase along with the growing number of rich people.

“I will put a price there and if somebody thinks it’s worth buying, then I will sell it. My intention is to hold it as an investment for the long term but the moment I sell it, I will look for another plot to buy, so that I stay in touch with the property market,” Mr. Lim added.

GCBs are among Singapore’s most luxurious homes. There are approximately 2,400 of such homes in 39 gazetted regions such as Dalvey, Nassim and Tanglin.

ONLY eight non-landed homes have been sold in the once property hot spot of Sentosa Cove in the first two months of the year.

This is down from 17 transactions in the last three months of last year and well under the second quarter of last year when the 71 sales were recorded. Then, the launch of City Developments’ The Residences at W Singapore accounted for 19 of the total sales.

Property watchers keep an eye on the Sentosa Cove transactions as the area is regarded as an exclusive segment of the local property market, where buyers opt for the unique lifestyle.

Agents reckon that prices of the condos there – all leasehold – some of which have sold for more than $2,000 psf have not moved much, with investors turning their attention to other parts of Singapore.

That may be one reason why sales seem to have dried up. In comparison, new home sales for January and February came to more than 1,000 units each month.

Other factors could be the lack of new launches and a large number of unsold units remaining. One property agent said: ‘It is a buyers’ market.’

The eight sales recorded until March 8 this year totalled $44 million and included new homes and subsale and resale transactions. Some sales occurred in the Seascape and Marina Collection estates, according to caveats lodged with the Urban Redevelopment Authority (URA).

However, while the appeal of condos seems to be fading with fewer people asking for viewings, landed homes sales on Sentosa Cove appear to be holding up.

Experts said that a segmented market might be emerging on Sentosa. The reasons for the sales slump likely include the lack of new launches and marketing activity and the big supply of condos – some already completed – that remains unsold.

Mr Tan Kok Keong, OrangeTee’s head of research and consultancy, said: ‘Enquiries have slowed a little but that’s also a function of a lack of marketing activities since there haven’t been many ads recently… Once a new launch takes place, it creates a buzz and will bring about transactions in neighbouring projects as well,’ he added.

Developers have had a bumper year with healthy cash flow and so have strong holding power, and seem to be biding their time.

There is certainly not a shortage of stock.

As at Feb 28, at least 481 homes from five projects have yet to find buyers.

Ho Bee’s Turquoise has 48 completed flats sitting unsold but 41 units have not been launched and are officially not on sale.

CDL executive chairman Kwek Leng Beng told the firm’s results briefing last month that it does not plan to launch any more units at The Residences at W Singapore in Sentosa Cove.

It has sold only 21 of the 56 units released in the 228-unit project.

Mr Kwek said of the project: ‘I can sell it very cheap because my land cost is cheap but I am not prepared to sell it. I have holding power, I will keep it and make it an investment, and later when there is good demand I will release and move on.’

Experts said condo home prices will likely hold steady as there is almost no land left for sale and developers are confident that once construction around Sentosa Cove is complete, buyers will stream back.

Bungalows seem to be bucking the trend of slower sales, with agents continuing to get good responses from their listings.

Newsman Realty managing director K. H. Tan said that after a slightly slower fourth quarter, interest is picking up again with his firm holding up to 20 viewings a week. Genuine offers have also been tabled, he added.

Caveats show that only two bungalows have been sold this year to March 8.

But Mr Tan said his firm has closed four other landed transactions whose caveats have yet to be lodged. A few others are in negotiation.

Sentosa Cove is the only place where foreigners without permanent resident status can buy landed homes.

The chief executive of Global Property Strategic Alliance, Mr Jeffrey Hong, said bungalows can also be customised for buyers.

But condos involve shared facilities and compete with prime apartments on the mainland, so that may deter the well-heeled.

‘Developers are probably also waiting to see how the January measures affect the market… Condo prices will probably hold stable or if it moves up, it’ll be by less than 3 per cent,’ added Mr Hong.

Cheng and her American teacher husband cannot afford property on the open market where a government-built apartment can fetch as much as $700,000, and they have been unsuccessful in balloting for flats available from the state at a cheaper price.

At her last attempt to buy an apartment directly from Singapore’s Housing Development Board (HDB), she was given a queue number of 1,983 for the 200 units offered, which meant she could get a unit only if 1,783 of the people before her dropped%out.

“It’s like trying to win the lottery,” she said of her efforts to buy her own place, a predicament shared by an increasing number of young Singaporeans who feel they can no longer afford homes, unlike their parents’ generation.

With general elections likely to be called soon, soaring property prices in Singapore pose not just an economic risk but a political issue that could erode support for Prime Minister Lee Hsien Loong’s ruling People’s Action Party (PAP).

Singapore private home prices rose 17.6% last year despite government attempts to cool the market in February and August. Resale prices of HDB apartments that house over 80% of the population gained 14%.

The city-state’s median household income rose a much smaller 3.1%, or 0.3% after adjusting for inflation, to $5,000 a month last year.

Singapore, Asia’s second-largest financial centre after Hong Kong, has one of the world’s highest rate of home ownership at 87%, thanks to a home-building programme to provide cheap housing for its citizens that began in the late 1960s.

But the HDB is building fewer flats and charging more for them. Prices of both resale HDB apartments and private property have also soared due to an influx of foreigners in recent years.

“The high property prices, especially for private homes, is a festering source of disappointment, unhappiness and perhaps anger among voters,” said Eugene Tan, a law lecturer at Singapore Management University.

“Parents are also concerned with how their children are going to afford comparable homes in the future. The angst and anxieties are made worse by the view that foreigners are pushing up property prices.”

Foreigners now make up 36% of Singapore’s population of 5.1 million, up from around 20% of 4 million people a decade earlier, after the government made it easier for foreigners to work in the Southeast Asian city-state.

Besides the large foreign influx, many Singaporeans also blame higher property prices on the sharp drop in HDB construction after the government agency moved to a build-to-order policy several years ago.

Singapore’s lively Internet community, more critical of the government than the city-state’s newspapers, note the sharp rise in immigration coincided with a drop in new dwelling units built by HDB.
According to HDB data, the government agency completed an average of 3,600 units a year in 2006-2008 compared with over 11,000 units per annum in 2001-2005.

“Our pay hasn’t doubled but the prices of flats have more than doubled, even for new HDB flats,” said Cheng, a former teacher who switched to part-time work after she had a baby last year. Her family is currently living with her parents.

ECONOMIC RISKS

Singapore, like Hong Kong and China, has found it difficult to keep a lid on property prices due to the surge in global liquidity that has pushed mortgage rates to near record lows and an influx of foreign money.

Kelvin Tay, chief investment strategist for Singapore at UBS’s private bank, said property prices are supported by low interest rates and the market could correct sharply if borrowing costs rise to more normal levels of around 3.5%.

The city-state’s banks currently pay less than 0.2% annual interest on deposits, while home buyers can get housing loans for as little as 0.8% per annum for the first year and about 1.5% thereafter. Inflation, meanwhile, is running at 5%.

The low mortgage rates have made prices affordable.

For example, after paying a minimum downpayment of 20% for a $1 million apartment in the suburbs, the going price for many newly launched units, a person can borrow $800,000 over 30 years and pay around $2,500 a month assuming an housing loan rate of 1% per annum.

The monthly payments soars to around S$3,600 a month if the rate rises to 3.5% per annum, according to interest rate table provided by propertyguru.com.sg, a popular internet housing site.

The government is aware that Singaporeans are concerned about high home prices, and has stepped up construction of HDB apartments and increased subsidies for first-time home buyers in the lower-income groups.

It also introduced tough new measures on Jan 13 that included tougher borrowing limits and a hefty stamp duty of 16 percent of the selling price for those who buy and sell within 12 months, aiming to clamp down on speculators.

Despite that and the Chinese New Year holiday, new private homes sales remained high at 1,101 units in February compared with 1,209 in January.

Developers such as CapitaLand (CATL.SI), 40-percent owned by the government’s Temasek Holdings (TEM.UL), have also bid aggressively at land sales, buying sites at prices that require a further increase in home prices for them to break even.

Prices of HDB resale apartments and low-end condominiums have stabilised since the government’s January measures but luxury homes continue to be in demand.

Earlier this month, a Chinese national-turned-Singaporean paid $33 million for a bungalow in a prime district, setting a record price for landed property at $2,038 per square foot.

At Sentosa Cove, a popular enclave for Asia’s super-rich, a son of Chinese billionaire Shen Wenrong bought a bungalow that came with a berth for yachts for $36 million, setting a record for homes in the area.

Analysts said there is spillover demand from cash-rich mainland Chinese investors who last year overtook Indonesians to become the largest group of foreign buyers of Singapore residential property.

UNEQUAL SINGAPORE

Singapore must hold general elections by February next year and Prime Minister Lee is expected to call one as early as next month. Both the ruling PAP and tiny opposition have already started campaigning.

The PAP has never lost an election and has ruled Singapore since independence in 1965.

Analysts say the problem of high home prices is compounded by the country’s rising income inequality, which is the worst in the developed world after Hong Kong, based on GINI coefficients calculated by the United Nations.

Singapore’s bottom 10% of households with at least one working member had an average monthly income of $1,400 last year, versus $23,684 for households in the top 10%, according to the city-state’s Department of Statistics.

Analysts do not recommend buying Singapore residential property at the low-end of the market, citing the upcoming supply of HDB and private homes as well as fears of further government intervention. Prices are, however, supported by rising rents and low interest rates.

But they are more sanguine about luxury apartments, citing increased demand from the rising number of wealthy foreigners moving to Singapore, in particular Chinese nationals who pay for their property purchases in cash.

“With regard to Singapore residential property, the government is very intent on keeping the low-end stable or even slightly down… The mid- to high-end is another story,” said Damien Ng, head of investment consulting at Bank Sarasin, a Swiss private bank.

Source : The Edge

But with that caveat, they are broadly in favour of the proposals unveiled by the Urban Redevelopment Authority (URA) last week.

The moves include requiring developers to release the price list of a new project two days before it is launched.

Developers would also have to give weekly updates on the URA website of the prices of new homes that have been sold. Currently, such prices are updated once a month.

Property insiders caution that the prompt release of such information could heat up prices in a fast-rising market.

‘In that kind of a market where prices are high, seeing those prices climbing might prompt people to buy in case they get priced out,’ said Knight Frank’s head of consultancy and research, Mr Png Poh Soon.

Jones Lang LaSalle’s head of research, Dr Chua Yang Liang, agreed.

‘It works both ways. If the market is feeling negative, it might lead to a further downward spiral of prices as more people hold back on buying property,’ he said.

But ultimately, analysts gave the proposed revisions the thumbs-up.

The URA is seeking public feedback on the proposals until April 18.

The changes, if implemented, would allow buyers to gain a more complete perspective of what they are buying into, which would empower them to make more informed decisions.

Mr Png said: ‘Rather than going down to the showflat and feeling pressured by agents, buyers can sit down and gather the information in a cool-headed manner.’

Mr Jason Huang, 24, is a potential home buyer who works in the property management sector. He said the release of such pricing details would help to address many of the questions he would face when considering whether to buy an apartment.

‘We can’t rely solely on agents to give us all the information, (buyers) also have a responsibility to find out if they are getting a good deal. Making the prices readily available within such a short time makes it easier for us,’ he said.

Dennis Wee Group director Chris Koh backed the thinking that the proposed changes would give buyers more confidence in marketing agents, especially since withholding pricing details can sometimes result in accusations of mis-selling.

‘(Our agency) once received a complaint after a buyer found out the neighbouring unit was sold for less. He was upset because he thought he could have obtained a better deal and we had to explain that factors like a better view and layout affected the price,’ said Mr Koh.

‘Confidentiality prevents us from disclosing the full list of prices but the situation could have been avoided if there were figures to show right from the start.’

Whenever the Government imposes measures to cool the residential property market, there would be knee-jerk reactions resulting in potential buyers hesitating and adopting a wait-and-see attitude.

This behaviour was obvious after the Aug 30 measures were announced but the short-lived patience of buyers resulted in a strong market comeback last November. Again, after the latest set of measures were announced in mid-January, many buyers retreated to the sidelines to see how things unfold before deciding to act. And what have they seen so far?

Respectable take-up

The recent release by the Urban Redevelopment Authority on units launched and sold by property developers last month was eagerly awaited as an early indicator of the state of the residential property market after additional cooling measures were imposed by the Government on Jan 14.

Being the month of the Chinese New Year, one would expect lower sales activity as festivities and celebrations took centre stage.

The 1,101 private units (excluding ECs) sold in the second month of the year was 8.9 per cent lower than the 1,209 private units sold in January and the lowest in a four-month downtrend from last November, which saw 1,915 units sold.

Proponents of a weakening residential property market have inferred that the market is indeed slowing in response to the latest round of market cooling measures.

This inference may be premature. Firstly, 1,101 units sold in a festive month with market downtime is a decent figure. It translates to more than 13,000 units annualised, which would be a respectable take-up compared to the 16,292 units last year.

Secondly, the 1,101 units sold last month topped the 911 and 1,066 units sold last September and October respectively. What does that mean?

In spite of the harsher Jan 14 cooling measures and a slower festive February, more units were sold than either of the two months after the Aug 30 measures. It would seem that the residential property market has been no less resilient after the January measures than it was after the August measures.

Among the fresh sales launches last month, URA data shows varied sale performances. Of the 44 units launched at Loft @ Stevens, 43 were sold (S$1,577 to S$2,092 psf), while Palmera East sold 31 of the 32 units offered (S$891 to S$1,355 psf).

Moderate take-up was seen for some of the launches which had more units marketed. My Manhattan put out 150 units for sale with 69 taken up (S$962 to S$1,462 psf), while 56 of the 116 units at Suites @ East Coast were sold (S$1,103 to S$1,495 psf). Waterfront Isle, which was first launched in January, released its remaining 350 units last month, achieving 282 sales (S$850 to S$1,165psf). About 67 per cent of last month’s sales were attributable to those in the “Outside Central Region”, i.e. mainly the more affordable mass market housing segment.

Optimistic land bidding

After the latest round of market cooling measures by the Government in January, the market also awaited response to the residential sites offered under the Government Land Sales (GLS) programme.

The first residential tender closing of this year was that of the Bishan site last month. It was an opening salvo that took many by surprise.

A total of 19 developers tendered for the prime suburban site, resulting in a top bid of S$550 million (S$869 psf per gross plot ratio), which suggested that future launch prices of units would be targeted above current levels.

Keen bidding continued for two other GLS residential sites at Bedok Reservoir and Sengkang Square, drawing top bids of S$465 and S$502 psf/gpr, respectively. With these top bids, the intended sale price of units would be least similar or higher than current prices.

These observations on residential land sales coupled with resilient figures on units sold by developers could be interpreted by buyers as signs that the residential market is holding up well in spite of the latest cooling measures.

Although the sales take-up has been reasonable, the number of units unsold is increasing. Last month, the total unsold units (comprising units launched but unsold and units not launched) reached 19,033, a 19-per-cent increase from January’s figure and markedly higher than last year’s monthly figures. This figure does not include additional units which would eventually come on stream from sites which have been sold.

Unless sales take-up improves, there is a risk of the inventory of unsold units growing, which could lead to over-supply.

Recent external events such as the crisis in Japan following the recent earthquake, tsunami and nuclear fall-out and the continuing unrest in the Middle East/North Africa could weigh on market outlook this year.

Uncertainties related to oil prices, inflation, macroeconomic tightening and stock market risks have begun to raise concerns. The initial preoccupation with the impact of the January cooling measures on the residential property market seems to be gradually over-shadowed by external conditions, which, if they worsen, could impact on market sentiment negatively.

These have occupied centre stage in the market environment and will determine the fate of the residential market in the months to come.

By Ong Teck Hui – executive director of research and consultancy at Credo Real Estate

Property analysts attributed the trend to the tighter loan-to-value (LTV) ratio for home buyers with existing mortgages. The LTV ratio has been cut twice since last year, from 80 percent to 70 percent in August 2010, then to 60 percent in January this year.

Based on the analysis of around 14,000 caveats lodged for private homes sold between January 2010 and February 2011, more home buyers have been choosing smaller units (with an average size of below 861 sq ft) after each of the last two rounds of cooling measures implemented by the government.

According to analysis by property firm International Property Advisor (IPA), more home owners also opted for cheaper units, costing below S$800,000.

Between 1 January and 30 August 2010, nearly 30 percent of home buyers opted for smaller units. This rose to 42 percent after the cooling measures implemented in August and jumped further to 46 percent after the measures imposed in January.

Similarly, the percentage of home buyers purchasing units costing below S$800,000 surged from 22 to 28 to 30 percent, over the three time periods tracked.

Ku Swee Yong, Chief Executive of IPA, said that each wave of cooling measures has driven more buyers to purchase smaller and cheaper units.

“Today, investors are forced to think smaller due to the higher cash down payment required and the lower 60 percent LTV ratio for mortgages,” said Mr. Ku. “The impact of the upfront cash requirement and the reduced borrowing limit has herded more investors towards smaller units and towards projects in the outskirts of Singapore.”

According to data released by CB Richard Ellis (CBRE), the average price of smaller units measuring 861 sq ft each stood at S$1,420 psf from 20 February to 30 August 2010, in between the implementation of two sets of cooling measures.

This climbed to S$1,441 psf between 31 August 2010 and 13 January 2011 and rose further to S$1,559 between 14 January and 28 February 2011.

A market veteran said that small units are “the ones that are setting the record high psf prices”.

Source : PropertyGuru

The focus of this other news analysis was on the winning margins of tenders for state land. Two state land parcels with residential components have so far this year already fetched winning margins exceeding S$100 million. Are there more to come? There was only one such case for the whole of last year.

Whether by coincidence or not, these huge winning margins were achieved shortly after the announcement of cooling measures mid-January.

Market watchers say this was due to a bigger divergence of views among developers on the impact of the measures.

I am not too sure about this analysis but I am pretty certain that developers do not bid according to their views of what they feel is a reasonable value for the site given the cooling measures.

When they bid, it is to win and so it has to be above this figure. The difference is the element of risk that the developer undertakes. When the developer gets it right, the rewards are great.

I would say the margin between the highest and second-placed bid reflects more of the intensity of the competition. The divergence of views and the level of risk-taking would be more accurately reflected in the difference between the top bid and the lowest bid.

I am also not sure if being a member of this S$100 million club is a roll of honour or dishonour? I am sure no developer would like to be reminded that they were involved in sites which they could have gotten for S$100 million less.

However, in today’s liquidity-laden market, the red faces and embarrassment do not last long. I would even go so far to say that the real losers are those who have yet to secure a site.

Judging from the wide participation and aggressive bids submitted for recent tenders, it would appear that the deep hunger among developers for development sites has returned.

Are we surprised? Developers are turning around their projects so quickly these days, with at least one taking a mere five months. Give an extra month for sales to reach the break-even mark and they are back in the market for more sites.

For these super-efficient developers, they need two sites per developer per year. Do we have enough sites? How many developers still need sites? And how many foreign developers have entered our market since last year?

Appreciate this and you will understand why the winning margins are once again starting to grow wider. And why collective sales are becoming popular again, notwithstanding the hassle of acquiring such sites.

And why you cannot discount the possibility that the massive S$1.7 billion Pine Grove collective sale could attract keen competition from several parties.

Is it time to raise the supply of sites? More importantly, is it right to continue to raise the supply of sites?

On Monday, we were told that global growth could be significantly dampened in the face of major new uncertainties brewing across the world. Japan’s March 11 catastrophe and the ongoing turmoil in the Middle East pose very significant uncertainties for the world – and at a time when recovery in the advanced economies remains fragile and inflation is rising across East Asia. Is this the cue for more stimulus measures and continued low interest rates?

Many of us have heard of price bubbles but how many know of quantity bubbles? This is the term that is most commonly used in reports to describe the ghost towns of China in Inner Mongolia and other remote parts of the country, where row upon row of housing apartment blocks are left practically vacant.

Housing prices have not corrected even though the apartments are not tenanted as the owners are able to hang on to them because of the low holding costs.

Will such images of vacant apartment blocks populate our housing landscape in Singapore in the not-too-distant future? If our mortgage rates continue to remain persistently low, such an outcome is entirely plausible.

By Colin Tan – Head, Research & Consultancy, at Chesterton Suntec International