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Burkill Hall and the Bandstand, two historic attractions at the Singapore Botanic Gardens will receive a fresh coat of paint by paints and coatings company, AkzoNobel, under the Garden City Fund, the National Parks Board’s registered charity.

Built in 1868, Burkill Hall is believed to be the only surviving example of an Anglo-Malayan plantation-style house in Southeast Asia. A popular wedding venue, it once served as the residence of the Gardens’ superintendents and Directors for more than a hundred years.

Meanwhile, the Bandstand is an octagonal gazebo-like building which derived its name from the open parade ground built in 1861. In the past, it regularly hosted evening performances by military bands, and concerts are still occasionally held there.

Refurbishment works for both buildings are expected to be completed by February next year.

Dr Nigel Taylor, Director of the Singapore Botanic Gardens, said: “The rich cultural heritage of the Singapore Botanic Gardens is a collection of the shared memories spanning generations of Singaporeans. Conservation of the Gardens’ icons like Burkill Hall and the Bandstand are key to this.”

Established in 1859, the 74-hectare Gardens attracts more than 4.4 million visitors annually, and was inscribed as Singapore’s first UNESCO World Heritage Site in 2015.

Credits: Propertyguru

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Posted by on in New Launches

Some property agencies marketing overseas real estate to Singaporeans have begun revising their ads to comply with recent changes to Singapore’s Code of Advertising Practice, reported Channel NewsAsia.

“We are now having to, for example, justify why the returns on investment is 5.5 percent,” said Century 21’s Chief Executive Officer Ku Swee Yong.

Although the new rules can help guide the industry, there are still some constraints for advertisers marketing foreign properties. For instance, it’s hard to show the investors’ net return as the income tax varies per individual.

“In that case, we take away the statement of return on investment (ROI). But then that makes the advertisement less attractive than it would be,” Ku shared.

“So perhaps companies with larger advertising budgets might take up more space in order to attach fine prints to justify the ROI, or perhaps companies might in fact downsize their budget on mainstream media and do more email blast or brochure handouts and direct mailers.”

Amendments to the rules, undertaken by the Advertising Standards Authority of Singapore (ASAS), aims to tackle speculative, misleading and unproven claims in ads. They came into effect on 12 August, but advertisers and media firms were given a three-month grace period to abide with the changes.

According to CASE Executive Director Seah Seng Choon, companies that flout the rules “run the risk of advertising space and time being withheld by media owners. They may even risk the withholding of trading privileges by advertisers”. In serious cases, the reputation of the company involved may also be affected.

CASE will also take action if they contravene the Consumer Protection Fair Trading Act.

“We can invite the company to sign a voluntary compliance agreement. If they decline, we can proceed to take an injunction against them to stop them from continuing with misleading advertisements,” Seah added.

credits: propertyguru

Tagged in: economy Overseas
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Posted by on in New Launches

The government has spent around $7 million to transform a 400-metre stretch along Kallang River into a beautiful community space, according to a Channel NewsAsia report.

Among the new changes to the area, which is situated between Potong Pasir Avenue 1 and St Andrew’s Junior College, is the creation of an open plaza capable of accommodating about 750 people.

The authorities also installed new seats and four lookout decks along the riverside where the public can relax and relish the breath-taking scenery.

With the help of students from St Andrew’s Secondary School, rain gardens were also planted along the stretch in June, while swales were dug out and seeded with plants. Both features are intended to improve the quality of rainwater runoff flowing into the river by filtering out sediments.

“If you look at our election manifesto in 2006, 10 years ago, we had a dream to create this ABC Kallang River park that will cater to our residents and will cater to the morning joggers and people who walk in the evening. I’m very happy and proud to say that this dream has now become a reality,” said Potong Pasir MP Sitoh Yih Pin, who unveiled the revamped waterfront.

“The bigger plan is to connect the ABC water project from Upper Pierce all the way to barrage at Marina. Going forward for all of us, we want to continue on what we had begun and complete it, so we hope that residents can give their support,” he added.

The makeover is in line with the Active, Beautiful, Clean Waters programme of the Public Utilities Board (PUB) which aims to turn canals, drains and reservoirs into scenic rivers and lakes that complement the surrounding parks and spaces.

credits:propertyguru

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PROPERTY developer and jewellery retailer Aspial Corporation's net profit dipped 92 per cent year-on-year to S$2.26 million for the first quarter ended March 31, 2015.

This was due in part to subdued demand for Singapore properties as a result of various property cooling measures. Aspial's retail sales were also affected by a decline in tourist arrivals and consumer spending.

The group's revenue was down 22 per cent to S$100.1 million, due to lower revenue contributions from its property and jewellery business. Revenue from its property business declined on lower recognition of sales from projects, the result of slow construction progress at This email address is being protected from spambots. You need JavaScript enabled to view it.?Itemid=143#.VX-1S_mqpBc">Waterfront@Faber and The Hillford.

The lower revenue from its jewellery business was attributed to "weak market sentiments and a smaller retail network". The ongoing consolidation of retail stores had resulted in a reduction of 12 stores in the first quarter as compared to a year ago.

 

The group's earnings per share stood at 0.12 cents, while its net asset value was 17.6 cents per ordinary share. No dividend has been declared.

Aspial's counter closed on Thursday, when it was last traded, at 39 cents, up half a cent.

 

Credits: businesstimes

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The most expensive penthouse in Singapore has been snapped up by Chinese billionaire Sun Tongyu, co-founder of e-commerce site Alibaba, signalling renewed interest among mainland buyers for luxury apartments in the city-state.

Sun, a Singapore permanent resident, paid a record-breaking S$51 million (HK$291 million) for the only penthouse unit at Le Nouvel Ardmore.

Located in the prime district at Ardmore Road, the swanky freehold development has only 43 large apartments.

This purchase works out to S$3,675 per sq ft for the 13,875 sq ft penthouse.

But given that 5,000 sq ft is a roof terrace, the apartment cost more than S$5,000 per sq ft for the indoor living area.

The transaction offers hope of a recovery for an anaemic market for Singapore's prime district condominiums, which suffered eight straight quarters of price declines.

One high-profile loss was S$15.8 million by Japanese billionaire Katsumi Tada when he sold his prime district penthouse in March.

But the latest development confirms the view that Singapore's high-end property is once again a magnet for wealthy mainlanders, thanks to the attractive price tags on luxury apartments following the introduction of property cooling measures in 2013. Significantly, these properties tend to be cheaper than in Hong Kong.

"The market for Hong Kong is mainland China but the Hong Kong design, ideology and planning systems are not too appealing as there is a feeling of claustrophobia or 'claustro-city', and such properties are not value-for-money," said Ong Kah Seng, director of property consultancy R'ST Research.

"Property prices are also very high in Hong Kong and opportunities are tapering off for mainland China buyers.

"So Singapore, also a financial city that is seemingly even stronger than Hong Kong in recent times, has become a choice pick for Chinese buyers."


Photo: Straits Times

Mainlanders continue to top the list of foreigners buying property in Singapore.

The number of properties purchased by Chinese nationals peaked in 2011, with 2,807 bought. That number dipped sharply to 995 in 2014, and is slowly picking up with 286 properties bought in the first five months of this year.

Most of the properties bought by the Chinese, about 70 per cent, cost S$1.5 million or less, said Eugene Lim from ERA, one of Singapore's largest real estate agencies.

Only 4 per cent were priced above S$5 million. But mainlanders are the largest group of foreign buyers of these high-end homes, with 10 per cent of such transactions in the last 17 months.

"For the higher-end properties, the Chinese buyers are typically well-travelled businessmen, and they are likely to also own properties in Hong Kong, Sydney, Melbourne, and London," Lim said.

With well-known Chinese tycoons such as Sun Tongyu picking up properties, analysts believe more high net-worth Chinese individuals will follow suit.

"However, they are usually quite discreet and you may only get to hear about it after the deal is done," said Lim.

The number of rich Chinese buying properties in Singapore is still not as many as before, but analysts say it is an ideal time to enter the market.

"Prices are still at a low point and there are a lot of savvy, rich people on the lookout for good investment opportunities to take a position just before the market turns," said George Tan, senior director at Savills Residential.

 

Credits: SouthChinaMorningPost

 

 
 

 

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Posted by on in New Launches

Singapore’s biggest real estate agency ERA Realty will hold an open house on Tuesday, 5 May for the public at its Mountbatten Square headquarters.

The full-day event from 10am to 8:30pm will target both aspiring and experienced agents to provide them with a better understanding of how ERA works.

Attendees will also be able to visit the agency’s 35,000 sq ft flagship office which includes a range of facilities from a lounge, cafe, training and meeting rooms, ten service counters, salespersons’ rooms and suites, to prayer rooms for Muslim colleagues.

Several talks will also be given by ERA’s top management around current market trends, up-and coming development projects and career advice.

ERA Singapore has been listed as the largest agency (by total number of registered real estate salespersons) by the Council for Estate Agencies, with close to 6,000 salespersons.

 

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Posted by on in New Launches

Once a naval base for the British army, Sembawang today bustles with sights and sounds of residential living.

Named after the the Kayea Ferruginea tree, also known locally as the Sembawang Tree, the Sembawang area in the early twentieth century was the site of the Nee Soon Rubber estate, and was later converted into a major naval base for the British army during colonial times. Construction works began in 1928 and was completed in 1938. During the decade-long construction period, colonial barracks were built in the area, which are now known as “black-and-white” houses because of the monochrome colours used.

After Singapore gained independence, the naval base was handed over to the government, who in 1968, converted it into a commercial dockyard (as Sembawang Shipyard) that went on to become Sembawang Corporation, a major state-owned industrial conglomerate.

Evolving through the years  

Plans to develop Sembawang were first mentioned in the Urban Redevelopment Authority’s (URA) Planning Report in 1996. This Development Guide Plan, with the aid of zoning maps, highlights the various land zoning proposals, which eventually led to the creation of Sembawang New Town. Over the past two and a half decades, Sembawang has undergone huge transformation and now plays host to a vibrant public housing estate. The new town also contains some of the most communal facilities found in Singapore, such as the Sembawang MRT station, Sembawang Bus Interchange, shopping malls, and primary schools.

Improvements on housing and amenities

As a growing town, Sembawang will continue to be developed with more amenities, transport infrastructure and housing for its residents. Potential homeowners can look forward to more housing choices as new areas in the south and the east of Sembawang will be developed progressively.

“Currently, there is a limited supply of private non-landed residential projects, with only two new private non-landed launches and one executive condominium (EC) launch in recent years, namely Canberra Residences, The Nautical and Skypark Residences (EC). Canberra Residences is completely sold out, while The Nautical is 99 percent sold out as at February 2015. Sales at Skypark Residences, too, have been moving steadily since its launch in November 2013. Based on recent URA developer data, the project is currently 69 percent sold out, with 347 units out of 506 units sold.

“Looking ahead, prospective buyers can look forward to two upcoming EC projects – one is located beside Skypark Residences and will be developed by Frasers Centrepoint limited and Keong Hong Holdings Ltd, while the other project, which will be developed by Qingjian Realty, will be located along Canberra Link,” shared Wong Xian Yang, Research and Consultancy Manager, OrangeTee.

Accompanying these developments will be new facilities and amenities to serve current and future residents.

“Sembawang residents can look forward to greater convenience with the upcoming Canberra MRT station (expected to be ready in 2019), which will be located along the North-South Line between Sembawang MRT station and Yishun MRT station.

“In addition, we expect the area around Canberra MRT station to be further developed within the next few years. While the land around the station is currently undeveloped, it is unlikely that the government would let the new MRT station be underutilised when it is completed. As such, we may see more land parcels released for residential development. At this point in time, the exact mix of residential projects is still unknown, but according to the URA Master Plan, we can expect at least a mixed development to be built beside the new Canberra MRT station.

“Other upcoming major developments that may catalyse prices in the Sembawang area, would be the Woodlands Regional Centre and the North-South expressway,” added Wong.

Smoother, shorter journeys

Apart from the new Canberra MRT station, plans to enhance road infrastructure have also be unveiled so that current and future residents can look forward to faster and more convenient travel.

“Two developments coming to Sembawang are likely to attract more buyers streaming to the estate. First is the addition of a new MRT station on the North-South Line between Sembawang and Yishun. Second is the future North-South Expressway (NSE), which will reduce travelling time to and from the city. The NSE will connect the city centre with towns along the north-south corridor – Woodlands, Sembawang, Yishun, Ang Mo Kio, Bishan and Toa Payoh – via 16 in-ramps and 17 out-ramps. Advance works have started progressively from 2013 and major construction works will start in 2016,” noted Peter Poh, Chief Operating Officer, Asia Wisdom Group.

Another highlight is a new road network at Sembawang Neighbourhood 1, which will serve new developments in the area.

More jobs near home

According to the URA Draft Master Plan 2013, more industrial developments along Gambas Avenue will be built within the next couple of years, so Sembawang residents can expect more employment opportunities closer to home. The upcoming development of Woodlands Regional Centre and North Coast Water Fab Park nearby will also bring jobs closer to residents.

Bonding with family and friends

The future Sembawang Community Hub, located in a green setting by the former Admiralty House (a national monument), will be a one-stop centre for residents. Designed for social interaction and bonding, the hub is set to bring together a cluster of sports and community amenities and services for all.

 

Taken ST Property

Tagged in: economy Profits Drop
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Posted by on in Commercial

Property magnate Kwek Leng Beng has won the title of "Best Travel Entrepreneur of the Year" at the TTG Travel Awards 2014, held earlier this month in Bangkok, Thailand.

The chairman of London-listed Millennium & Copthorne Hotels (M&C) was honoured for setting new standards for his organisation's brand and for contributing to areas in the travel industry such as sustainability, training and education.

"I am very proud to be conferred the prestigious TTG Travel Entrepreneur of the Year. This honour would not have been possible without the support of many capable people who work with me as a team," said Kwek.

He added: "An an entrepreneur, I am determined to continue to acquire and build hotels that meet the latest needs and trends of our guests."

This achievement is the latest in a number of hospitality-related awards picked up by Kwek over the years. Other accolades include "Tourism Entrepreneur of the Year" and "Outstanding Contributor to Tourism" by the Singapore Tourism Board in 1997, and the "Asian Hotelier of the Decade" in 2000 by JLL Hotels and Arthur Andersen.

Mr Kwek expanded the M&C brand from just one hotel in the early 1970s to one of the largest hotel owners and operators in the world. The company now has more than 120 hotels.

M&C is a subsidiary of property giant CDL. Both M&C and CDL are members of Hong Leong Group Singapore.

Credits: Property Guru

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Poor sales were recorded on the first day of launch for Marina One Residences with only 20 units sold last Saturday, according to media reports.

This is a sharp turnaround from the strong build-up seen during the preview phase, which saw more than 300 units taken up since 3 October, many by bulk buyers.

Singaporeans account for about 70 percent of buyers, while the rest are PRs and foreign nationalities. The top three groups of overseas buyers are from Malaysia at 20 percent, followed by Indonesia and China.

Approximately 70 percent of the units at Marina One Residences are one- and two-bedrooms. Prices start from around $1.4 million for a one-bedder while two-bedders cost above $2 million.

M+S appears to have adopted a cautious approach to selling units at the development. Just one of its two towers is available for sale right now and only 372 of the total 1,042 apartments have initially been released.

Located in the heart of Singapore's new downtown core, the 99-year leasehold condominium is close to Marina Bay MRT station.

Meanwhile, sales of luxury apartments in Singapore's central business district have been muted in recent times.

A CBRE report attributed the drop in sales to the TDSR framework which took effect at the end of June 2013.

At the same time, foreign buyers who used to be big players in Singapore's prime residential market, appear to be retreating since the ABSD was raised to 15 percent.

Credits: Property Guru

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It's a 5,000-bed workers dormitory.

Centurion Corporation continues its expansion in Malaysia with its first acquisition outside of Johor.

The Group has acquired a piece of land located at Seberang Perai Selatan in Penang, Malaysia for SGD2.45m.

In a media release, Centurion reveals that the plot of land is strategically located at the fringe of Bukit Minyak Industrial Park, which houses notable multinational companies like Flextronics Technology and JCY HDD Technology. The proposed acquisition is subject to receipt of consent from the State of Penang, and is expected to be completed in 4Q14. Post seeking approval to convert the land from its current agricultural purpose to workers accommodation development, Centurion intends to build a 5,000 bed workers dormitory managed under the Westlite brand. Construction period is expected to take about 2 years.

Credits: Singapore Business Review

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Trends solidify this not-so-sunny forecast.

With interim results coming soon for China property, it is believed that they will be generally lackluster, due to various trends that have led to the forecast.

According to a research note from Maybank Kim Eng, these trends are: higher gearing HoH due to slower-than-expected cash collection ratio, and most developers maintaining contract sales targets for 2014 w/ a few exceptions (potentially Hopson, Sino-Ocean).

Further, another trend was also noted in the form of lower margin guidance for some that have not guided down.

The report said that it must be recalled that Agile, CG and Shimao already guided lower GPMs before blackout.

Here's more from Maybank Kim Eng:

Est 5-8% YoY profit growth for 1H: For the sector, we expect 5-8% YoY growth in underlying profit for 1H14, with COLI, KWG, and Shimao to post highest YoY core earnings growth.

So far, a few developers including COGO (81 HK, NR) and Greenland (337 HK, NR) announced negative profit warnings.

We believe the interim earnings represent more backward looking sales and might not represent full year's picture if there are some outlier projects being delivered.

In our view, future margin outlook and the cashflow situations are key.

A good number of China developers under our coverage would have to guide more negative operating cashflow for this year and likely to slow down either new landbanking or new starts GFA to maintain healthy cashflows.

Margin-wise, we see there could be some downside risks to consensus for Yuexiu Prop and Agile.

Our 2014F earnings for Sunac, Franshion, and Agile are 5% or more above Bloomberg consensus while 8% lower for Yuexiu Prop and 7% lower for Sino-Ocean.

Over 1M, property stocks under our coverage rose an average 21%.

There should be better stock entry points given some lackluster results pending in August.

Credits: Singapore Business Review

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Other countries can't handle their housing bubbles.

Singapore has lowered down housing prices by 3.7% over the past 12 months, as other cities like London, Manhattan and Sydney struggle to keep their housing prices from surging.

Bloomberg says that Singapore and Hong Kong did not even break a sweat as it reined in home prices by imposing measures including mortgage caps, taxes on property flippers, and levies on foreign buyers as high as 15%.

The report, however, says that the ease with which Singapore and Hong Kong cooled down their property market could be due to the cities' island geographies, preponderance of public housing resulting in two-tier housing markets and citizens willing to tolerate government directives. London and New York have nowhere near the same level of control over their economies and the behavior of their residents.

Here's more from Bloomberg:

Singapore and Hong Kong, as a special administrative region of China, have governments with policy-making power over their entire geographic areas, where they are relatively free of political opposition from neighborhood groups or borough councils that stymie directives or mitigate their effectiveness. The Asian cities control the land supply and are the biggest landlords.

That allows them to implement decisive policy measures. For example, in January 2013, the Monetary Authority of Singapore, effectively the central bank and chief regulator, cut the mortgage ratio allowable on purchases of second homes while more than doubling minimum down payments from 10 percent to 25 percent. The banks had no choice but to follow.

The dominance of the private sector in the housing markets of New York and London also leaves them with less leverage than their counterparts in Asia. More than 80 percent of Singapore residents live in government-built flats, according to the city's Housing & Development Board.

Of those living in Singapore's public housing, more than 90 percent own their apartments, the result of government policy promoting home ownership through a combination of cheap loans, housing grants and a program that allows buyers to use accumulated government pension contributions for purchases.

Public housing doesn't carry a stigma in Singapore, where most is located in master-planned towns, with schools, sports and medical facilities in landscaped surroundings.

Credits: Singapore Business Review

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She has been connected with Kallang Development for 20 years.

Bukit Sembawang Estates announced the appointment of Fam Lee San as non-executive non-independent director.

Ms Fam, 47, joined Kallang Development, a subsidiary of Lee Rubber Co in 1994. As a financial controller, she is responsible for overseeing the finance, corporate treasury, accounting and corporate secretarial functions of various property companies in the group that are involved in property development and investment businesses in both Singapore and Malaysia, according to a Bukit Sembawang Estates report.

Prior to joining the group, Ms Fam was an auditor with an international public accounting firm. Ms Fam holds a Bachelor of Accountancy degree from the National University of Singapore and is a member of the Institute of Singapore Chartered Accountants.

Credits: Singapore Business Review

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We're fully regulated by Singaporean law, the group asserts.

Brazilian property development firm EcoHouse yesterday issued a scathing reply to the fact that it had been listed under the MAS' Investor Alert List.

The company reiterated that the MAs list does not imply that EcoHouse Group has contravened any Singaporean laws.

"We are somewhat surprised that some individuals had the impression that the company was under MAS regulation and welcome and clarification provided by the MAS list. EcoHouse Group is, and has always been, fully regulated as required by Singaporean law," the group stated.

Here's more from EcoHouse

Furthermore, MAS publicly announced that EcoHouse had been added to the Investor Alert List in April 2014, therefore it seems extremely strange to see this news surface in some circles of the press three months later and being portrayed as a new development.

We can only conclude that this resurfacing of old news is driven by those with an agenda against the company, who wish to impede EcoHouse Groups's work in delivering quality homes to Brazilian families and market leading returns to investors.

To reiterate, the MAS list does not imply that EcoHouse Group has contravened any Singaporean regulations, or that there has been anything improper in the company's marketing and promotions.

Nor is the list intended to advise anyone against investing against the companies featured on it. Conversely, some of the leading real estate companies in Singapore also feature on the list as they are unregulated by the MAS.

Credits: Singapore Business Review

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May's stellar take-up simply isn't enough.

Private developers are in for difficult news. Even after the stellar take-up of private homes in May, primary private home sales are still expected to dip 33% in 2014, according to OCBC.

According to the report, FY14 primary home sales are expected to slide to 10k units, with prices in the mass-market segment more at risk compared to mid-tier and high-end developments.

"We forecast FY14 primary private home sales to dip 33% to 10k units, and see prices in mass-market segment to be more at risk versus the mid-tier and high end. A positive catalyst over the mid-term could be the reversal of certain government curbs once headline prices (the URA price index) shows a decline in excess of ~10%," noted OCBC.

Here's more from OCBC:
In May-14, despite a 92% MoM pop in monthly sales to 1,528 units, the take-up rate of 82% in the month was lower on both a MoM and YoY basis (125% in Apr-14; 97% in May-13).

The eight new launches showed a diverse range of performance, with take-up rates ranging from 10% to 98%.

Amongst the four new mass-market launches, in particular, we found that developers that
were willing to price their projects competitively, such as Coco Palms (98% of launched units sold), performed better.

Credits: Singapore Business Review

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Posted by on in Commercial

AMONG the major sectors of the local property market, the office sector had been seen as a pariah. The post-Lehman crisis redrew the financial landscape where deleveraging was the buzzword. Financial institutions were in no mood to expand, cost cuttings were deep and on top of that, the crisis triggered a series of flare-ups in the eurozone. As the supply of Grade A office buildings in the CBD increased with the completion of the new buildings in the Marina Bay area, vacancy levels started to rise. Consequently, by the law of demand and supply, rents began to decline, and had been doing so continuously since the second quarter of 2011.

The appetite for micro-strata units from small-time investors driven out of the residential market has maintained, if not, increased the rate per square foot paid for commercial property. This, in addition to a low interest rate environment has squeezed yields as capital values remained high, leading transaction volumes to decline as institutional buyers found it difficult to justify a purchase based on initial rental returns.

When the projected supply of CBD Grade A office space looked alarming, the fortunes of the office market started to reverse in Q1 2013 with rents surprisingly taking a strong rebound and rising 1.2 per cent quarter-on-quarter.

Although one can explain away the rental increase using the traditional argument of falling vacancy rates, observers are struggling to comprehend how this can be, when some 1.5 million sq ft of Grade A space in the CBD remains vacant. This is more than a year's average demand of 1.07 million sq ft in the past 10 years. If one looks islandwide, the total supply of office space from now till 2017 is expected to average 1.8 million sq ft per annum. This is significantly above the 10-year average islandwide net demand of 1.2 million sq ft per annum.

Doesn't this point to a market glut and so why then are rents and capital values rising?

There are a few possible reasons why and they are:

A sizeable amount of the new supply is in the non-CBD region.
The continued low interest rate environment
Tactical short-term behaviour of the landlords
Supply in the non-CBD region

Of the 5.5 million sq ft of new office supply (all grades) coming on stream from 2013 to 2016, 52 per cent is in the non-CBD regions. With the Urban Redevelopment Authority attempting to set up regional business hubs in places like Jurong Gateway and Paya Lebar Central, as well as the proliferation of business parks, it is now insufficient to merely look at broad statistics to determine rents or capital values.

Financial institutions are likely to continue housing their front to mid-offices in CBD Grade A offices, if rents remain at reasonable levels. Non-financial companies, for example, representative companies for foreign manufacturing firms, fast moving consumer goods companies and petroleum corporations, having normally been located in the fringes of the CBD or ageing CBD properties, may well be enticed to move to locations outside the CBD.

With more non-CBD location options, the market is becoming segmented with CBD Grade A offices catering to institutions who need to remain there and others moving out.

With only 2.6 million sq ft of office space (all grades) slated for completion in the CBD from now till 2016, it represents an annualised supply of about 661,700 sq ft, clearly below the annual average take-up. This is a very low number and explains why landlords are becoming bold to raise rents.

Low interest rate environment

Whilst office yields have been falling since Q2 2008, so too have interest rates. The spread between these two is still wide.

In fact, it is so glaring that for some financial institutions who are renting space, from an opportunity cost angle, wouldn't it be better for them to purchase their own building (subject to the approval from the Monetary Authority of Singapore), than to lend out their surplus cash at overnight rates which last stood at 0.03 per cent in March 2013.

The fact of the matter here is that in Singapore, the lack of an interest rate policy meant that interest rates here have been lower than they should have been if there had been a policy. What this means is that the office yields will be low as they track our already benign interest rates.

For investors who hail from countries which have an interest rate policy, trying to replicate their initial yield driven investment philosophy here would therefore be a challenge. Office yields here will remain lower than global yields because of this important feature that we do not have an interest rate policy. Investors will have to reap their all-in returns through rental inflation and/or a higher terminal value when they sell the asset.

Landlords' behaviour

For the period up to 2015, there are very few landlords holding the new supply of CBD Grade A office space, while older stock in Raffles Place, City Hall and Orchard Road are sporting low vacancy rates. As such landlords can easily manage this vacancy, whether it is a few floors or a few hundred thousand square feet, allowing them to hold up rents.

The low interest rate environment is also lending a helping hand to these landlords as their holding cost is minimal.

With a number of smaller, new-to-market tenants, seeking to "be seen" in the CBD, unit rent is unlikely to be the determining factor; as location and image prevail.

Outlook

We believe that with new supply of CBD Grade A office buildings being limited over the coming three to four years, office rents will rise rather than fall, aided by key landlords' control over current supply and stronger than normal holding power supported by the low interest rate environment. While this may appear counter-intuitive to some observers, given the excess supply, one must keep in mind that 52 per cent of this new supply is in areas outside the CBD.

For offices in the CBD, demand is still likely to derive from financial, financial related companies like private equity, and oil and commodity trading set-ups. These are recognisable entities and landlords for new buildings that have either just completed or will be completing soon should be able to capitalise on these known drivers.

Therefore, there is a very high chance that at least for the next two to three years, rents for CBD Grade A offices can rise significantly.

Credits: BT Invest

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Prices to drop by 12-15%.

According to PropNex, over the next three years, 80,000 new BTO flats will be completed and keys handed over to buyers. HDB will also launch a total of 24,300 BTO flats in 2014 – this is just slightly lower than last year's supply of 25,100 units.

And according to Minister Khaw, 18,000 households in the next 3 years will be moving to a BTO flat, thus they are required to sell off their existing flat within the 6 months. With the forthcoming supply of HDB resale units in the market, it is expected to further create a downward pressure for HDB resale prices. In the next 2 years, we are expecting HDB resale prices may well drop by 12 to 15 percent," Mr Mohamed Ismail, CEO of PropNex Realty.

Resale prices for HDB flats continued their decline in the first quarter of 2014, a trend which is unlikely to reverse even by the end of this year — this is the result of a convergence of measures imposed last year to cool the market and a continued supply of new flats. HDB today indicated that the resale price index in 1Q14 was 198.5, which represented a 1.6 percent contraction from the previous quarter.

This continued decline comes after a 6.6 percent price growth in 2012 and a double-digit growth in 2011. It also marked three consecutive quarters of price decreases from 2013 (the index dipped 0.9 percent in 3Q13 and 1.5 percent in 4Q13).

Mr Ismail said, "The potent combination of the measures has been effective at slowing down the price growth of HDB resale prices. I am not surprised that the downward trend to continue with prices dropping by between 6 to 8 percent in 2014 and beyond," commented Mr Ismail.

"The recent HDB's change to the valuation procedure will also create a cautious approach from buyers, and I foresee them being more careful when giving an offer for a particular flat. This will further increase a downward pressure on resale prices in the coming quarters."

Credits: Singapore Business Review

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Price dropped steeply by 3.8% since peak.

According to Barclays, the Urban Redevelopment Authority's flash data for 1Q14 indicate that its index for private home prices fell 2.7 points to 211.6 in 1Q14, down 1.3% q/q and -0.8% y/y.

This is the second decline after -0.9% q/q in 4Q13, bringing the cumulative decline to 2.2% since the peak.

Here's more from Barclays:

Private home prices are still 59% above the last trough in 2009. Public housing fared worse, falling for the third straight quarter for a cumulative slide of 3.9% from the peak.

Private home price declines were steeper for mid- to high-end homes. In the Core Central Region (CCR), which usually represents high-end homes, prices fell 1.3% after declining 2.1% in 4Q13.

This is the fourth consecutive quarter of price declines in this segment, bringing the total decline of CCR prices to 3.8% since the peak.

Prices of midend homes fell 2.8% in 1Q14 while prices of suburban homes – proxied by the Outside Central Region (OCR) – was relatively more resilient even as it decreased for the second consecutive quarter by 0.3% after its 1.0% decrease in the previous quarter.

Credits: Singapore Business Review

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Posted by on in Commercial

A FREEHOLD residential site near Hillview Avenue that failed to sell last year has gone back on the market for about $55 million.

The 43,557 sq ft vacant plot was once the site of Hillview House, an industrial building that has been demolished.

It can be developed into a 10-storey condominium with a maximum gross floor area of about 83,630 sq ft, given a gross plot ratio of 1.92.

There is also an estimated $18.2 million development charge applicable for anyone redeveloping the land.

Including the development charge, the total price translates to around $875 per sq ft (psf) per plot ratio (ppr).

The site belongs to a single owner who has met an Urban Redevelopment Authority (URA) deadline of Feb 23 to cease industrial activity, said marketing agent DTZ in a statement yesterday.

However, it declined to disclose further details.

The property first went on the market last year but the tender closed in July with no buyer.

Sources said that the seller, a local family, received a few offers last year but they did not go further over concerns that the potential developer would not demolish Hillview House in time for the URA's February deadline.

The asking price was not disclosed in previous reports but The Straits Times understands that it is close to the current one.

The site is on elevated ground with an unobstructed view of the surrounding landed housing.

It is also near nature parks such as Little Guilin and Bukit Timah Nature Reserve, and amenities such as West Mall, Rail Mall, Bukit Timah Shopping Centre and Beauty World Plaza.

"The Hillview area has matured into a popular and established residential enclave," said Ms Swee Shou Fern, director of DTZ's investment advisory services.

The area will be served by Hillview MRT station on the Downtown Line when it becomes operational next year, she noted.

The site is next to the 64-unit Century Mansions, which was completed in 1998, and the 299-unit Hillbrooks, which was finished in 1999.

The most recent transaction at Century Mansions was a resale at $921 psf in October last year, according to caveats lodged with the URA.

A resale at $1,019 psf was completed at Hillbrooks last September.

The tender closes on May 21.

Credits: ST Property

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Posted by on in New Launches

By Mr. Propwise

Okay so you’ve read various outlooks for the property market in 2014 and beyond, you’ve heard everyone’s arguments about why the property market should go up (yes someone actually predicted that), down or sideways. But what you really want to know is – how much will property prices fall (if at all) in 2014?

The danger of expert forecasts

Long-time readers of Propwise.sg will know that I don’t believe in making forecasts. Instead, I believe we should keep track of where we are in the Property Market Cycle and prepare ourselves for it (HINT: we should be preparing for a bear market ahead).

Others have written about the folly of following expert forecasts, but suffice to say that nobody knows what will happen in the future. At best, we can only make an educated guess based on our analysis of the data, and that guess is only one of many possible future outcomes. That being said, I thought it would be helpful to compile the property market forecasts that a wide range of market watchers are making, and share some of my thoughts about them.

What the experts are predicting

Here’s the table of forecasts I’ve compiled – I’ve also included details on the person making the forecast, organization he or she belongs to, their position, and the type of organization they belong to. It is sorted roughly in the order from the most positive to most negative.

140224 Figure 1Figure 1 – 2014 Singapore Residential Property Price Forecasts

We can see a few things from the table above.

First, the range of forecasts is wide, from an increase of 2% to a fall of 20%. This should tell you something about how predictable the market is – not very. There’s a lot of uncertainty due to the myriad factors that influence the market – interest rates, employment, supply, taxes, financing rules etc.

Second, most of the forecasts are for the property market to fall. And while it is not possible to take a simple average as we will not be making an apples-to-apples comparison, if I had to summarize the forecasts I would say the general range is looking at a 5% to 15% fall in property prices. While a single forecast is likely to be inaccurate, the average of a large number of forecasts is likely to be closer to the eventual outcome, if you believe in the Wisdom of the Crowds.

Third, the type of organization matters when trying to determine how reliable a forecast is. When you next hear a forecast, one of the key things you should ask yourself is – what vested interest does this person have in the property market? From the table above we can see that the most positive forecasts are from property agencies and developers. Hmm… I’ll leave you to figure that one out yourself, Sherlock.

Cooling measures not going away anytime soon

While property developers and agencies were hoping (praying?) for a loosening of property measures after a mild 0.9% quarter-on-quarter decrease in the 4th quarter of 2013 (after rising by 61% since mid-2009), their hopes were dashed post the announcement of Budget 2014.

Take a look at what Finance Minister Tharman Shanmugaratnam said about the property market: “Given the run-up in prices in the last four years, it is too early to start relaxing our measures… We are not engineering a hard landing. But neither are we able to eliminate cycles in the property market, with upswings in prices in some years followed by corrections.”

My read is that the government is not going to support the property market at all costs – it will let the cycle play out and try to minimize the damage to Singapore’s financial system and the impact on household balance sheets. In other words, the government will allow property prices to fall, as long as that fall is not too extreme.

When you read news about market watchers calling on the government to relax the cooling measures, think again about the vested interests we discussed above. Who is calling for it and what do they have to gain from it?

Wisdom from the Wolf of Wall Street

One of the most interesting movies I’ve watched in a while, the Wolf of Wall Street, is probably Leonardo DiCaprio’s and Martin Scorsese’s finest work. Among the best scenes in the movie, in my opinion, occurs at the beginning when a young Jordan Belfort is taken to lunch by his new boss Mark Hanna (played by Matthew McConaughey).

At lunch, Mark gives Jordan some fundamental advice about succeeding in the financial industry, including this gem: “First rule of Wall Street, nobody, and I don’t care if you’re Warren Buffett or Jimmy Buffett, nobody knows if a stock’s going up or down, or sideways, least of all stock brokers. But we pretend to know.”

As you listen to the various forecasts of the market from property experts, just remember that for some it is their job to convince you that they know exactly where it is going to go.

Taken from Yahoo

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