Patience is key: Investors’ holding power tested as interest rates rise and rents fall
Property owners prepare to pounce on rare good deals.
As investors stubbornly await for cooling measures to be lifted, they may have to wait for a little while longer, as holding costs rise in tandem with interest rates, and rents are likely to remain soft.
According to Celine Chan, an analyst from Orange Tee, investors’ mettle would be put to the test, as they can’t expect cooling measures to be lifted soon and the market faces an upcoming supply deluge.
However, the gloomy outlook can’t overshadow the occasional profitable deal for investors.
“Good deals should arise amidst bearish market sentiments, and keen eyed investors should be able to pick up a bargain or two,” Chan said.
Meanwhile, unsold inventories continue to fall, partly due to the tapering of Government Land Sales sites in recent years and the consistent demand for new launches.
“Notably, the number of unsold completed inventories in the CCR has fallen significantly, from 1,917 units in 2Q15 to 1,261 units in 3Q15. With prices (high-end) significantly lower from their peaks, the high end market presents an attractive value proposition for interested buyers,” Chan explained.
Chan also notes that occupancy rates have improved slightly, but she warned that it’s likely to trend downwards. Occupancy rates have risen to 92.2% in 3Q from 92.1% in the previous quarter.
“58,348 private residential units are expected to be completed over the next few years, and 33,228 units will be in the OCR, which represents 57% of the pipeline supply. The CCR and RCR are expected to see 8,441 and 16,679 units completing over the next few years. With record impending supply and demand remaining capped due to tightened foreign labour conditions, occupancy rates are expected to fall,” Chan said.
Private residential prices and rents have also fallen substantially in 3Q, as the latter is now down by 8% since its peak in 3Q13.
“On a quarterly basis, the private residential property price index has fallen by 1.3%, which is the largest quarterly fall since 2Q09. Prices for non-landed properties in core central region (CCR) fell by 1.2%, while rest of central area (RCR) and outside central region (OCR) both registered a 1.6% decline,” Chan said.
Source: Singapore Business Review 26th Oct 2015
Singapore Real Estate Market News
Indonesia Property Gates Open to Foreigners, but is there a Catch?
The government has recently said that it will allow foreigners to buy and own Indonesia property in the country – a move that has got developers rubbing their hands but many others scratching their heads.
The idea of opening the door to the international market has been suggested numerous times by property developers to the government, but always to no avail. Recently however, amid a prolonged period of slower national economic growth, President Joko Widodo agreed in principle to allow foreign ownership of property in the country.
The opening of the market will come with some conditions yet to be officially confirmed. However, government officials have reportedly said that the type of property foreigners are allowed to purchase will be limited to apartments valued more than Rp 5 billion (US$ 375,000).
Property developers have welcomed the plan. They argue that the new policy could boost growth in the property sector which has seen sluggish demand in the past year on the back of a slowing economy. The Indonesian economy decelerated to 4.7 per cent in the first quarter this year, the slowest level in five years.
The government sees the policy as a way to increase state revenue from the super luxury goods tax, which is imposed on purchases of expensive apartments. It is also hoped this measure will boost the confidence and competitiveness of Indonesian developers in the region.
Not Freehold, But Owned for Life
The 1960 Land Law clearly stipulates that foreigners can only obtain property under the right-of-use category, while the right-of-ownership or freehold category is applicable only to Indonesian citizens.
A property under the right-of-ownership category can be bought, sold, mortgaged and inherited by the buyer, while the right-of-use category allows the buyer to use the property for a specific and pre-agreed purpose for a defined amount of time. In the case of foreign buyers, as regulated in a 1996 government regulation, the right-of-use category lapses in 25 years, but can be extended for another 20 years.
Land Affairs and Spatial Planning Minister Ferry Mursyidan Baldan says his office has been tasked with revising the 1996 government regulation. The revision, Mr Baldan says, will look to allow foreigners to obtain property still under the right-of-use category as mandated by the 1960 Land Law, but without any time limits.
“The state will allow foreign nationals to have apartments in Indonesia for their lifetime, and the apartments may be bequeathed to their descendants or resold,” the minister said, as quoted by local media.
Furthermore, Mr Baldan added that the government has no intention of restricting the location of apartments that can be purchased by foreigners, despite calls for the policy to be implemented in special economic zones.
Rp 5 Billion, Too Much?
Foreigners in Indonesia are pleased with the new policy, but could be put off by the reported Rp 5 billion price floor.
“I think it’s a bit high. Most foreigners here are not very rich. They’re richer than average Indonesians but not richer than rich Indonesians. They are here to work. And would they be allowed to borrow money to buy the apartment? If not, then that’s quite a lot of money for people who just work,” one foreigner working in Indonesia told The Establishment Post.
Vice chairman of developer association Real Estate Indonesia (REI) Arthur Batubara told The Establishment Post that Rp 5 billion may or may not be too much for foreigners, depending on what kind of property they will be allowed to buy.
Mr Batubara says that people should not dwell too much on figure of Rp 5 billion, or any other restrictions, as it is not yet for certain. He explained that the government did not mention a specific price floor during its talks with REI, and has not issued any official announcement since then.
“The Rp 5 billion is not confirmed. Nothing has been confirmed yet as of today. The idea is that there must be a threshold to distinguish the market, but there has not been study on that. Maybe this is one of our weaknesses, we like to just call out numbers that we feel is convenient,” he said.
The idea of a price limit is to distinguish the market of foreign buyers to that of the local buyers who are predominantly of middle and lower income earners. Whatever the price floor the government eventually comes out with, the message is clear: Only big spenders are allowed in, and stay away from affordable houses.
Even with such restrictions, Mr Batubara believes that there will be foreigners who will be interested in purchasing property in Indonesia.
“We can’t really say that the potential is huge. But there is a market for it,” he said, adding that the market will be dominated by speculative investors rather than those looking to reside in Indonesia.
He went on to add that even if it turns out that luxury apartments in Indonesia do not attract much foreign interest, it still would not be a problem as such lavish properties are not out of reach for Indonesian citizens.
“This market will still exist even without foreign buyers. There has always been an Indonesian market for this. The market for super luxury property exists in Indonesia, though the numbers are few,” he said.
Mr Batubara said allowing foreign ownership of property is a necessity for Indonesia’s property sector in order to be able to compete with regional counterparts, especially with the coming of the Asean Economic Community (AEC) at the end of the year.
“If we compare our policy to the ones in existing regional market, it’s clear that we do need flexibility on foreign ownership so that our property can compete with regional counterpart like Singapore, Malaysia, Australia, and the Philippines. Our market has become more global so we need to be more adaptive,” he said.
Mr Batubara said that he saw Malaysia and Singapore as countries that have the “ideal restrictions” in their regulation on foreign ownership of property.
Malaysia has arguably the most liberal policy on foreign ownership in the region. The only restriction for foreigners to own a freehold property in Malaysia is a price threshold which varies in different states. The threshold currently ranges between RM 1mil (US$ 261,000) to RM 2 mil.
Singapore has no such price thresholds but require foreigners to acquire government approval for the purchase of restricted property such as vacant residential land, landed property, and property in strata development other than condominiums.
Thailand’s policy on foreign ownership of apartments is also interesting to note as a comparison. Thailand uses foreign ownership quote of condominiums as the restriction in its policy. It rules that no more than 49 per cent of the total unit floor area in a condominium can be foreign owned. The remaining 51 per cent must be owned by Thai naturals.
Will Cheap Houses be Affected?
One of the biggest concerns analysts have on the decision to allow foreign ownership is that, if not well regulated, it may trigger a property bubble in Indonesia.
Ali Tranghanda, the executive director of Indonesia Property Watch told The Jakarta Globe that the price floor for foreigners should be more than Rp 5 billion.
“Otherwise, foreigners will go on a shopping spree,” Ali said. “I am concerned we will be in a property bubble within five years if the market is too widely opened. Look at Singapore and China: bubbles developed after their governments allowed foreign ownership.”
Association of Housing Development in Indonesia (Apersi) chairman Eddy Ganefo warned that the policy will encourage developers to compete in building luxury properties which will have an effect on the price of surrounding land, making it almost impossible to build cheap houses for the poor.
A lack of houses, especially for the low-income citizens, has been a major problem for Indonesia. According to the Indonesian Real Estate Developers Association (REI), there is a demand for 800,000 houses in the country every year, while existing developers are only able to supply 200,000 houses a year.
The government launched its “One Million Houses Program” in April which aims to provide adequate housing facilities to low income citizens. Half of the houses will be funded by the state budget, while the construction of the remaining half would require the participation of private developers.
There is a worry that this project will be neglected by developers once the door for foreigners to buy expensive apartments is opened. Mr Batubara of REI dismissed such suggestions.
“Those are views of people who don’t understand market forces. The force of the market will clearly force developers to build what the market needs. The biggest demand is not from this kind of market (foreign investors). The biggest market is for houses that are worth below Rp 200 million,” he said.
Source: The Establishment Post 7th July 2015
Singapore Real Estate Market News
With more homes than all of Singapore combined,
inevitable glut hits Iskandar
KUALA LUMPUR, May 23 — Frenzied construction by developers hoping to tap the real estate potential of the Iskandar region is ironically leading to a glut that is depressing property value in the southern economic development corridor.
According to a report by the Financial Times, the Monetary Authority of Singapore (MAS) has already sounded a warning over the 336,000 private residential units either built or being built in Iskandar to target buyers from the republic.
The figure exceeds the total of all completed private homes on the market in the island state, said the MAS, illustrating the margin with which supply will exceed demand in Iskandar.
The development in Iskandar also far outstrips any that are meant for local buyers in the rest of Johor, which official figures put as 38,000 under construction and a further 48,000 in the planning stage.
Worryingly for the primarily China-based developers is that most of these projects are already in progress even as demand is tapering off.
One such developer, Country Garden, has 45 condominium towers with a combined total of 9,500 units set to come online in 2017, but has received bookings for less than a third some two years after construction began in 2013.
This excess supply is also hitting builders such as Guangzhou R&F Properties that has sold just half of its 1,400 luxury home units in the region; another, Greenland Group, is planning another 2,000.
Aside from the obvious glut, other factors depressing sales in the region are the prices that have ballooned to levels comparable to the national capital of Kuala Lumpur and property controls that limit foreigners to buying property priced at no less than RM1 million.
According to data by Asean Confidential, the effects on property value growth in Iskandar is already palpable.
Going into 2012, it began climbing steadily to eventually outstrip the national average, before peaking at 25 per cent in annual appreciation. But it began falling almost immediately, plunging to 10 per cent last year, less than a percentage point over the rest of the country.
Local developers are already either scaling back their plans for Iskandar or retooling for non-residential developments, according to the FT.
In March, Medini Iskandar announced that it was no longer building new residential units there due to the number of developers building such property.
Tropicana is considering building a hospital and office tower in place of the remaining 2,000 units of residential homes from the initial 3,000 planned.
Another, Brunfield, has opted to completely scrap its planned 1,400-unit condominium project there.
On April 20, Malay Mail Online reported Johor lawmakers as saying that the reality is demand has not caught up with the state’s supply of premium residential and commercial properties.
Source: Malaymail Online 23rd May 2015
Singapore Real Estate Market News
Be careful when buying properties overseas: CASE
SINGAPORE — The consumer watchdog is warning Singaporeans to be careful when buying property overseas, in light of complaints received from investors who have had their fingers burned.
In line with these concerns, the Advertising Standards Authority of Singapore (ASAS) also announced today it is working with the Monetary Authority of Singapore and the Council for Estate Agencies to enhance the current Advertising Code on advertisements on investments in financial instruments and properties.
This would include raising the standards of disclosure, and strengthening measures to deal with advertisers who repeatedly place misleading advertisements.
“This will give members of the public a better understanding of the risks of the investment and greater protection against recalcitrant advertisers. Details will be developed in consultation with the industry and the new guidelines will be implemented by the end of this year,” the ASAS said.
In 2013 and 2014, the Consumers Association of Singapore (CASE) received 13 complaints regarding purchases of foreign properties, with most of the complaints involving consumers who had invested in foreign properties but were unable to get back their promised returns or pay-outs.
“Many of them were lured into making the foreign property purchase by promises of high rental yields or high capital growth. However, after making the investment, many of the consumers were unable to obtain any update on their investment and in some cases, have lost contact the property investment company,” said CASE in a media release today (May 4). “Some of the cases involved a loss of large sums of money of more than S$100,000 by the consumer.”
CASE noted that more Singaporeans are buying properties overseas and many foreign properties are being advertised and marketed in Singapore. However, investing in an unfamiliar foreign market holds high risks, such as foreign currency fluctuations, property market trends, sovereign risks and interest rate risks.
“Some of these deals have turned sour when prices declined sharply resulting in investors losing a large sum of their money,” said CASE. “There are also reported cases where the developer of foreign properties became insolvent and was unable to continue with the development resulting in a total loss of the investment by the consumers.”
CASE president Lim Blow Chuan is also urging authorities to review existing legislation to ensure that developers who sell their foreign properties locally abide by the same standards in information disclosure as local developers.
He also said: “Investors should remain cautious about these high risk investments and keep in mind their financial needs and commitments as well as the risks involved.”
Source: Business Times 4 May 2015
Singapore Real Estate Market News
Singaporean demand for overseas properties continues to wane
SINGAPOREANS’ appetite for overseas properties continues to dwindle this year after a soft patch last year, prompting overseas developers to cut down on marketing exhibitions here, agents say.
Their overseas property purchases have invariably been curbed by lower borrowing capacities under the total debt servicing ratio (TDSR) since June 2013.
Doris Tan, JLL head of international residential properties, noted that while the imposition of the additional buyers’ stamp duty prompted some property investors to look outside of Singapore, that initial rise had receded since TDSR practically “killed the whole market”. Even in the popular London market, investors are taking a wait-and-see approach pending the UK general elections in May, she observed.
Once a hot overseas market for Singapore property investors, Malaysia is also losing its lustre given the negative spin from concerns of oversupply in Iskandar, said Getty Goh, director of property research and consultancy firm Ascendant Assets, which partners agencies on research work to pitch to potential buyers. He noted that Singaporeans are also keeping away from Iskandar due to a lack of a resale and rental market now. Both London and Malaysia have imposed their own “cooling measures” to rein in prices, he added.
“A combination of reasons has caused overseas markets to become less attractive.”
The only official statistics available for Singaporeans’ overseas property purchases comes from the Monetary Authority of Singapore (MAS) survey of real estate agencies in Singapore, which was last published in its Financial Stability Review in November.
The MAS survey showed that the total value of overseas properties snapped up by Singaporeans hit a peak of S$1.67 billion in the first half of 2013.
This coincided with the tightening of ABSD in January 2013 as rates were raised by 5-7 percentage points and the ABSD started to be imposed on Singaporeans buying their second homes and permanent residents, foreigners and non-individuals making first-time purchases. But Singaporeans’ purchase of overseas properties soon dropped to S$1.35 billion in the second half of 2013 after the TDSR was imposed, and slipped further to S$1.07 billion in the first half of 2014. Data for the second half of 2014 is not available.
Properties in Britain, Malaysia and Australia accounted for 91 per cent of total transactions by value in the first six months of 2014 and 76 per cent by number.
Century21 Singapore CEO Ku Swee Yong noted that investors “started getting cold feet” when prices in Malaysia shot up too quickly and sales to overseas buyers in the UK have slowed. Meanwhile, the pick-up in new markets such as Japan, Philippines and Cambodia was not able to make up for the slack in the traditional markets.
Since early last year, Malaysia doubled the price threshold for foreign home buyers to RM1 million (S$370,000) and raised real property gains tax to 30 per cent for properties sold by foreigners within five years of purchase and 5 per cent thereafter – with the exemption of Iskandar Medini, a township within the Nusajaya flagship zone.
In the UK, capital gains tax of 18 per cent or 28 per cent on non-residents disposing of UK residential property started from April 6; Australia also proposed in February that a fee of A$5,000 (S$5,200) to be charged on foreign property purchases under A$1 million, and A$10,000 for every additional A$1 million.
Colliers International operations director Nina Davies pointed out that there was a noticeable drop in the overall number of overseas developers and agents marketing properties in Singapore.
“It is apparent that there are fewer developments being marketed at this point in time, although we have not experienced this decline ourselves. Demand for well-located property in London continues to be strong.”
Mr Goh noted that post-TDSR, buyers with S$100,000 to S$200,000 of cash but are unable to get optimal loans as it is their second or third housing loan would have considered going for Bangkok or Iskandar because of the lower purchase quantums and accessibility of loans in the host countries. But many with the interest for overseas properties would already have sunk in their monies.
“With Singapore prices levelling off, some are waiting on the sidelines and reserving their cash for the opportune time to enter Singapore market,” he added. “They also think overseas markets may not present as much opportunities as several quarters or a year ago. They are starting to look around in the local market.”
Singaporeans’ wariness towards overseas properties was again fanned by news of investments gone wrong in cases such as Ecohouse, Mr Goh said, referring to the Brazilian social-housing developer that dangled annual yields of 20 per cent, amassed up to S$65.55 million from Singapore investors and then left them largely unpaid.
Savills head of international residential sales Cherrin Loo noted that some developers are more cautious about how they spend their money in the face of cooling interest from Singaporean buyers and are holding back from full-fledged exhibitions. But property exhibitions are still going on for selected markets such as the UK, Japan and Malaysia.
This weekend, for instance, Kuala Lumpur-based developer Pavilion Group is unveiling Pavilion Suites Kuala Lumpur – a collection of 383 luxurious units ranging from 704 square feet to 1,254 sq ft – at the Four Seasons Hotel at an average of RM3,500 per square foot (psf).
Knight Frank is marketing Grand Central, a project by Weston Homes in Cambridge, UK comprising apartments and townhouses, also at the Four Seasons Hotel this weekend; at Shangri-La Hotel, Colliers is marketing Quintain’s London project Alto, located at Wembley Park.
JLL Singapore’s promotion for Manhattan Plaza, a London project of Telford Homes, is on appointment basis next Tuesday to Thursday at its Singapore office in Republic Plaza. Some 120 units, starting from £450,000 (S$906,000) for a one-bedroom apartment, are being launched globally.
Overseas developers are still seeing strong buyers’ interest from other places such as Hong Kong, Shanghai and United Arab Emirates, Ms Tan of JLL said.
Source: Business Times 18 April 2015
Singapore Real Estate Market News
The Big Read: Iskandar’s lure is a strong pull for S’poreans
SINGAPORE — Every weekday morning before the sun even rises, Singaporean teacher Naharudin Shariff, 46, will leave his home in Nusajaya – about 20 minutes’ drive from Johor Bahru city centre – and make his way across the Causeway to send his three daughters to different schools, before driving to work himself.
Come evening, he repeats the routine: After work, he will wait for his daughters – one is studying in junior college, the other two in secondary school – to finish their classes, pick them up, and head back to Malaysia. They try to reach home by 7pm every night and have dinner together. “If one of my daughters has to attend an extra class in school, we all plan our day around that. Everyone tries to arrange their schedules so that everyone does something that day. That way we don’t have to make so many trips to and fro,” he said.
The daily shuttling between the two countries is a small inconvenience for a better quality of life in Johor, he said. “The whole family is happier (in Johor),” he told this newspaper at in his three-storey house in Horizon Hills, a gated community in Nusajaya. “Our house here is a lot bigger (compared to the condominium unit he used to own in Singapore). My wife can now have the spice garden she had always wanted, and our kids keep a rabbit and a chick as pets.”
He added: “It is very quiet, especially at night. Very peaceful and relaxing, you don’t hear vehicles or the MRT. When you look out the window, you see trees instead of another concrete block.”
Source: Today 4th April 2015
Singapore Real Estate Market News
From shopping malls to airline hangars: Lend Lease and its Singapore projects
Lend Lease said it will hold a 30 per cent stake in a joint venture with a partner – reportedly the sovereign wealth fund Abu Dhabi Investment Authority – to own and develop the the Paya Lebar project.
The land parcel, which comprises two plots separated by Sims Avenue, has a potential gross floor area of 1.78 million sq ft. It is connected to the Payar Lebar MRT, and will be able to house offices, shops, and apartments.
Lend Lease is no stranger to the real estate market in Singapore, having first established a presence here back in 1973. Chief executive Steve McCann said the Paya Lebar deal is in line with the group’s aim to increase international revenue, with Singapore flagged as a key growth market.
Source: The Straits Times 2nd April 2015
Singapore Real Estate Market News
Lend Lease top bidder for Paya Lebar Central site
Six bids have been received for a 99-year leasehold mixed-use site in Paya Lebar Central. The top bid of S$1.67 billion or S$942.56 per square foot per plot ratio (psf ppr) came from entities linked to Australia’s Lend Lease group.
A consortium comprising Keppel Land; Li Ka-shing’s Cheung Kong Holdings/Hutchison Whampoa; and Singapore Press Holdings was the second highest bidder. It offered nearly S$1.54 billion or S$866.56 psf ppr for the site.
The lowest bidder, a unit of Ho Bee Land, offered S$889.18 million or S$501.35 psf ppr for the site.
The tender for the site, conducted by Urban Redevelopment Authority (URA), closed on March 31.
Nearly 55 per cent of the project’s maximum gross floor area (GFA) of about 1.77 million square feet has to be for office use. The rest of the space can be for additional office, retail, entertainment, F&B and residential uses. Hotel use is not allowed.
URA has limited the number of strata lots to just five for the entire office component of at least 968,751 sq ft GFA.
For the retail and activity-generating uses, not more than three strata lots will be allowed. The residential component can comprise up to 440 individually strata titled units.
Source: Business Times 31 March 2015
Singapore Real Estate Market News
No subletting of HDB industrial properties from June 1, 2015
NEW and existing tenants of HDB industrial properties will not be allowed to sublet their industrial properties from June 1, 2015, the Housing and Development Board said on Monday.
Tenants with existing approved subletting arrangements will be allowed to renew their subletting agreements up to Dec 31, 2017, to give them time to make business adjustments.
“The revised subletting policy will better support industrialists in operating their core businesses, and enable more productive use of scarce industrial land in Singapore,” HDB said.
It said its industrial space is to support industrialists in operating their core businesses: “This revision also seeks to promote more responsible and productive use of scarce industrial land, by encouraging tenants to rent only the amount of space that they need. This change will also align HDB’s subletting policy for industrial properties with that of other government agencies such as JTC Corporation.”
HDB manages close to 12,000 industrial properties island-wide, including workshops, warehouses and factories. About 98 per cent are rented out on one-, two- or three-year term tenancies.
Currently, tenants of HDB industrial properties are allowed to sublet up to 50 per cent of their factory floor space. About 380 tenants, or about 3 per cent, of the total number of tenants, are currently subletting space in their industrial properties.
Source: The Business times 30th March 2015
Singapore Real Estate Market News
Property auction sales almost double in Q1 to $34.3m
Ten properties have been sold year-to-date, for S$34.3 million, in Singapore’s property auction market. This is double the S$13.7 million done in the fourth quarter of last year, and almost twice the S$17.9 million in Q1 2014.
In an update to JLL’s figures released earlier this month, Colliers said that of the 10 properties sold this quarter, only one was an owner sale: a row of five adjoining shophouses that sold for S$14.6 million.
The remaining nine properties put up by mortgagees (or lenders) comprised one factory unit and eight residential homes.
Grace Ng, deputy managing director of Colliers, said that shophouses are still highly sought after by investors due to their scarcity. High-end properties are too, and are changing hands at 20-30 per cent below their 2007/8 peak prices.
Five central region apartments were sold. Two of them were an apartment each in Pearl Bank (Outram) and Twin Regency (Kim Tian Road) that were hammered at S$1.35 million and S$2.3 million respectively.
The other three were an apartment at Ville Royale (River Valley) sold for S$1.83 million, a unit at The Grange (Grange Road) sold for S$4.15 million and one in Estilo (Wilkie Road) sold for S$800,000. This was a 517 square foot one-bedder.
Outside the central area, one apartment at Amber Residences (East Coast) was sold for S$2.7 million.
Among the landed properties, an intermediate terrace and a corner house at Eng Kong Drive (Upper Bukit Timah) were sold for S$2.42 million and S$3.3 million respectively.
The last mortgagee (lender) sale was a factory unit at Empire Techno Centre (Kaki Bukit Road), which was knocked down at S$800,000.
Financial institutions repossess properties from financially stretched borrowers and put their homes up for auction, especially if the borrowers struggle to find buyers themselves. This results in mortgagee sales.
In all, 187 properties were put up for sale by auction in Q1 2015.
Of these, 56 were put up by lenders, while the remaining 131 were put up by owners who might have chosen this disposal method due to the quiet secondary market.
The number of properties put up by lenders this quarter rose 19 per cent quarter on quarter. It is also more than twice the 22 properties put up in Q1 2014.
Home owners who struggle to service their mortgages found it challenging to dispose their units in the secondary market due to the ongoing cooling measures.
Climbing interest rates – in the form of the Singapore Interbank Offered Rate (Sibor), to which the mortgage rates are pegged – certainly do not help either, said Ms Ng.
She expects the total sales value for Singapore’s property auction market to come in at S$50 million to S$55 million for H1 2015, up 10-21 per cent from H2 2014.
Condominium and apartment units are likely to form the bulk of lender sales, in view of the upcoming project completions, as investors will have to make the balance payment on their property’s completion, she said.
Source: Business One 28 March 2015
Singapore Real Estate Market News
World’s biggest sovereign fund eyes S’pore property
OSLO — Norway’s sovereign wealth fund, the world’s largest, is eying commercial real estate in Singapore as it makes final preparations for its first Asian property investment.
After scouring Asia for investment opportunities, the US$870 billion (S$1.2 trillion) fund, built from Norway’s oil revenue, has narrowed its search to Singapore and Tokyo, said Mr Karsten Kallevig, head of real estate investments at the Oslo-based fund.
“My guess is office properties will be the main component because that is what is for sale in those parts of town. There aren’t many shopping malls in the centre of Tokyo or the centre of Singapore,” he said in a Bloomberg interview published yesterday.
While the fund doesn’t have an ultimate spending target, “we can invest a lot in Asia,” he added. Just as in its earlier purchases in Europe and the US, the fund will find partners for the Asian expansion, he said.
Singapore has seen a booming office property market in recent years, with companies in social media, technology and commodities taking up space in the central business district. Office rents in the CBD jumped 14 per cent last year, the biggest increase in the region amid limited supply, real estate agency Jones Lang LaSalle said.
The Government Pension Fund Global, the official name of the Norwegian sovereign fund. targets markets based on growth potential and supply constraints as it seeks to invest in 10 to 15 major cities globally. It has already snapped up properties in New York, Paris, London and Berlin among other cities.
The fund held about US$18 billion, or just 2.2 per cent of its assets, in real estate last year, and is seeking to build that share to 5 per cent. The focus is on specific markets rather than sectors, Mr Kallevig said.
Source: Today 24th March 2015
Singapore Real Estate Market News
Lee Kuan Yew Dies: Impacts on Singapore Real Estate Development Remain
Former Singapore Prime Minister, Lee Kuan Yew, who served his country for more than 30 years, “passed away peacefully at the Singapore General Hospital at 3:18” Singapore time, said the government in a statement, as reported by The Wall Street Journal
The beloved leader, who died at the age of 91 years old, will be remembered for his contributions to Singapore and its development.
He had several insights on property and real estate development in general, which even advanced countries may use as guiding principles.
1. Real Estate as a Sound Investment
According to leewatch.info, Mr. Lee had provided great tips on how one should value his or her property because if one sells it unwisely, one might not have something in the future to hold on to. Here are some of his words of wisdom.
“Everybody owns their own homes and the value of their homes go up as development takes place. Some are unwise enough to sell their homes, thinking they can buy another one, they then find they can’t and have to rent a flat,” said Mr. Lee.
Always think carefully and exercise prudence while assessing the real value of your home.
“But those who held on to their homes, I’ve seen their property values going up, five times, 10 times, 15 times, 20 times, ” said Mr. Lee.
2. A Home For Everyone
Mr. Lee was an advocate of public housing from the start, reports leewatch.info. “This was the plan which we had from the very beginning, to give everybody a home at cost or below cost and as development takes place, everybody gets a lift, all boats rise as the tide rises,” said Mr. Lee.
With this, everyone has a sense of ownership of the city, making them care more for the community, as noted in Urban Solutions.
Currently, 90% of Singaporeans have their own homes, The Wall Street Journal reports.
3. Embrace Change Yet Keep Up With Aspirations
The former Prime Minister, a Cambridge-trained lawyer, said public housing must be aligned and must “keep up” with the “rising aspirations” or dreams of Singaporeans, notes leewatch.info. It is not enough to just have a house, it must be fit to be called home, even in these modern times.
Mr. Lee said, ” We are investing to bring it up to date and you pay a token sum, the government carries the rest and HDB [House and Development Board] has been doing a fine job to give you an environment that you have today,” as reported on leewatch.info.
4. Safe Environment
Mr. Lee said a good city must also focus on a safe and comfortable environment. “It is no use having good surroundings, if you are afraid all the time,” he said, as quoted by Urban Solutions.
He even added that in order to feel safe “The police force must be effective, [but] not visible.”
5. Have a Clean Environment
When Mr. Lee visited Osaka and smelled chemical fumes from factories, he vowed not to let that happen in Singapore. “I said no, we mustn’t allow that. We are a small island; unless we protect ourselves by placing the right industries in the right places – taking into consideration the prevailing winds – we will despoil the city. This could easily have become an unlivable city,” he was quoted as saying.
6. Have a Livable Space
Mr. Lee, who was also an advocate of the environment said, “Hong Kong has crowded, tall buildings, you seldom get sunshine in the streets, no greenery… So I said alright, from west to east and east to west, we’ll knock down the whole city and rebuild it,” as reported in Urban Solutions.
In general, according to leewatch.info, the Minister aimed and provided to have a better environment for his fellow Singaporeans, “We became different, trees everywhere, opens spaces with grass, children’s playground and a clean and safe environment,” said Mr. Lee.
Source: Realty Today 23 March 2015
Singapore Real Estate Market News
Singapore investors most confident in Asia of buying property in region: CBRE
SINGAPOREAN investors are the most confident in Asia in property investments in the region, a CBRE report on Tuesday showed.
About 70 per cent of those polled said they intend to buy more property this year. This is followed by investors out of Hong Kong and China, though in the latter’s case, Chinese investors have greater intention to sell. The shift suggests that they intend to offload non-core assets onshore, in favour of overseas property purchases, CBRE said.
This comes, though, as the eagerness over real-estate purchases has tempered. This year, 54 per cent of investors plan to buy more property in the region, down from 64 per cent a year ago.
Investors out of Singapore also count among the top most active outbound investors this year, falling only behind those from South Korea and China.
Major markets such as China, Japan and Australia remain the top investment destinations in the region, though other mature markets such as Hong Kong and Singapore have moved up in ranking, CBRE said.
Source: Business Time 17th March 2015
Singapore Real Estate Market News
HDB may get more powers to enter flats without court warrant
The Ministry of National Development (MND) announced it had submitted proposed amendments to the Housing and Development Act in parliament yesterday.
The bill contains four key provisions that aims to help HDB enforce its rules and regulations.
First, it will empower HDB officers to enter a flat in cases of investigation and urgent repair works with or without a court warrant.
The housing board may obtain a court warrant to enter a flat if owners continue to bar HDB officers from entering the premises following a 24-hour notice period.
For a warrantless entry, HDB will only exercise this right if there is an imminent danger to public safety or public health in the area, such as flat owners demolishing the structural beams.
The second key provision in the bill raises the penalty for unauthorized renovation. Under the existing rules, homeowners can only engage a Registered Renovation Contractor (RRC) to refurbish their flats. Both parties must also follow the terms and conditions set by HDB for any approved renovation work.
Under the new changes, the fines against RRCs, lessees and non-registered contractors will be raised from $5,000 to $20,000, and they can be imprisoned for up to one year. The agency can also impose a maximum penalty of $10,000 on the lessee and RRC.
Given there have been cases whereby HDBs investigation on lease infringement was hampered by non-cooperative owners, the revised rules will also give officers enhanced powers of investigation.
These include the ability to enter premises with a warrant, take written statements, obtain evidence such as photographs, audio or video recordings of the flat, and require individuals to provide information or documents relevant to the investigation.
Finally, the new changes allow HDB to adjust its fines against lease infringement so that the amount will commensurate the severity of the violation, up to a maximum of $50,000.
Currently, the quantum of penalty is fixed for each type of lease infringement such as unauthorized subletting and misuse of flats for non-residential purposes. Aside from the fine, HDB may also compulsorily acquire a flat.
Source: Property Guru 13 March 2015
Timely for Govt to review studio apartment scheme: Property watchers
SINGAPORE: Two-room Housing and Development Board (HDB) flats and studio apartments have different lease periods, but both are similar in terms of their sizes and layout, and given the similarities, property watchers say it is timely to review the studio apartment scheme, as the Government ramps up building of two-room units.
Studio apartments were first launched in 1998 to provide seniors, aged 55 years and above, with another option to get cash out of their bigger homes by downsizing to a smaller place. At that time, new 2-room flats were not available.
Said Mr Nicholas Mak, executive director of research & consultancy at SLP International Property Consultants: “One consideration is whether the Government should totally do away with studio apartments and move some of the desirable features of studio apartments into two-room flats for the elderly.
“Another suggestion is for the Government to extend the lease for studio apartments, but by doing this the Government is minimising the difference between studio apartments and two-room flats. So it again raises the question that if you are going to make these two products very similar to each other, is there even a need to differentiate between them in the future?”
The two-room flat has a 99-year lease, the studio apartment has a 30-year lease. Studio apartments also cannot be resold in the open market, and must be returned to the HDB, when the owners pass on.
Otherwise, studio apartments and 2-room units are similar in several ways. Both are of the same size: 45 square metres – although studio apartments do come in a smaller 36 square metres – and both have a similar layout. Except for elderly-friendly features, such as grab bars, a less discerning eye may take a studio apartment for a two-room flat.
Property firm PropNex says studio apartments may not be as popular among their target audience, the seniors, possibly due to the shorter lease.
Said Key Executive Officer of PropNex Realty Lim Yong Hock: “Many elderly, when they want to buy a HDB flat, they will consider, ‘what if I pass on, can I leave this property to my next generation?’ But if the lease is only 30 years, then many of them may not feel that comfortable. They will probably feel that ‘this property does not belong to me, I can’t pass on to my next generation’. That’s one of the biggest setbacks.”
In HDB’s last Build-to-Order exercise in Feb 2015, a studio apartment in the mature MacPherson area went for at least S$114,000, while a two-room unit in the non-mature town of Bukit Batok cost a minimum of S$80,000, excluding grants.
On its website, the HDB says the studio apartments and two-room flats are “not similar flat offerings”. It adds that it’s inappropriate to make direct comparison of the prices of studio apartments with two-room BTO flats.
This is because these two flat types may, for instance, be situated in different locations. The HDB added that studio apartments are generally located in mature estates, close to amenities and transport nodes.
Source: Channel News Asia 9th March 2015
The ranks of Singapore’s ultra- wealthy are set to grow by more than 1,700 by 2024 – the strongest growth among 108 cities in a new global survey.
In the survey, an ultra-wealthy person is defined as having a net worth of US$30 million (S$41 million), not counting their main home.
The Wealth Report 2015 by Knight Frank predicts a 54.3 per cent jump in the number of these ultra cashed-up types from 3,227 last year to 4,979 in 2024.
The report uses the term “ultra high net worth individual”.
Singapore is ranked third among cities where the ultra-wealthy live, behind Tokyo with 3,575 and London with 4,364.
The next biggest projected jump by 2024 after Singapore was in Hong Kong, with 1,251 more such individuals.
The Republic’s population of “centa-millionaires” – those with net worth of US$100 million or more – is set to rise 53 per cent in the next 10 years to 1,177 in 2024.
And the population of US-dollar billionaires here – currently 24, the ninth-highest among the cities surveyed – is also set to rise 50 per cent to 36 billionaires in 2024.
Comparing last year with 2013, Singapore saw a 2 per cent rise in both the ultra-wealthy and centa- millionaires, and 4 per cent more billionaires, the report said.
“Singapore’s strengthening position as a regional financial and transportation hub, coupled with stable and pro-business government, has attracted multinational corporations to relocate their operations here,” said Ms Alice Tan, Knight Frank Singapore’s head of consultancy and research.
“These strong attributes have also attracted many (ultra- wealthy) to relocate and invest in Singapore, especially in the real estate sector.”
Across countries, Singapore has seen the second-highest inflow of the wealthy – someone with net worth of at least US$1 million – over the past 10 years.
About 45,000 wealthy people were added here from 2003 to 2013. This meant a 20 per cent increase to 225,000 wealthy people.
Many of the wealthy here are from China, India and Indonesia, while restrictions on confidentiality in Switzerland have caused some wealthy people previously there for tax purposes to relocate here, or to Britain or the United Arab Emirates, the report said.
Ms Tan said demand for commercial and especially office space has been rising, as more multinational firms relocate here. “Of late, both family and institutional funds have shown greater interest to invest in commercial property as rental yields are higher compared to residential property and the outlook for rental growth is broadly positive for 2015.”
The report found that investments by Singapore’s ultra- wealthy in commercial property have increased over the past five years, with 80 per cent of their portfolios typically dedicated to investing in properties here.
The preferred location for outbound investments by Singapore’s ultra-wealthy is Britain, and in the residential sector.
Source: The Straits Times 7th March 2015
Freehold retail properties in Paya Lebar, Aljunied up for sale
SINGAPORE – Two freehold retail properties near the Paya Lebar and Aljunied MRT stations are up for sale.
Both of them will be sold by expression of interest, said marketing agent Knight Frank Singapore.
One of them is the basement retail unit at Grandlink Square, an eight-storey mixed-use development located diagonally across a commercial site in Paya Lebar Central which has been put up for sale through the Government Land Sale (GLS) programme.
The 26,533 sq ft space is expected to sell for $40 million or about S$1,508 per sq ft. It is currently tenanted to several operators, such as a wellness centre, a family karaoke, a pool hall, and a gaming arcade.
Source: The Straits Times 4th March 2015
Australia’s proposed property fees unlikely to impact Singaporean buyers significantly: analysts
SINGAPORE: Australia is planning to introduce fees for foreigners who buy residential properties there. But some property watchers say the impact on Singaporean buyers is unlikely to be significant.
Buying properties Down Under may soon cost you more if proposals to charge extra fees on foreign buyers are approved.
Among the suggestions are: For properties below A$1 million, foreign buyers will be charged A$5,000 (about S$5,300), and for properties over A$1 million, buyers will incur A$10,000 for every additional million in the purchase price.
Even if these proposals get the go-ahead, one firm here said the impact on Singaporean buyers is unlikely to be significant. The company specialises in Australian residential properties and has marketed several developments in Melbourne.
Peter Thng, executive director at Reapfield Property Consultants, said: “From our experiences, most clients are purchasing properties priced between A$400,000 to A$800,000 – so that would fall under the A$5,000 fee category. As a result, I don’t think that will be impactful on purchases in Singapore. It represents approximately 1 per cent of the purchase price.”
Mr Thng added that if needed, some developers might absorb part of the fees to boost sales.
Advertisements for overseas properties, especially those in Australia, the UK and Malaysia, are a common sight here. Singapore was also one of the top sources of foreign investment in Australian properties.
From May 2012 to June 2013, Australia’s Foreign Investment Review Board approved about A$2 billion worth of real estate investment from Singaporeans in Australia – behind China, Canada and the United States.
China took the top spot, with total real estate investment from the region coming in at almost A$6 billion.
In the year before, Singapore was the second-biggest source of foreign investment in Australian properties, with about A$5.7 billion spent.
And investment funds from Singapore are still expected to flow into Australia, according to Australian-based company K4 Developments, which gave the main reasons as the stamp duties and loan curbs buyers face in the Singapore market.
Edward Tat, director at K4 Developments, said: “The other reason as well is the weakening Australian dollar … due in part to the Reserve Bank of Australia’s interest rate cuts, and there’s expectation of further cuts.”
The company has just launched its first project in Singapore – a development in Perth.
However, those looking to pick up properties in Sydney will most likely have to pay a premium, as a two-bedroom unit in a project in downtown Sydney – Sydney by Crown – recently transacted for about A$1.6 million.
Source: CNA 1st March 2015
New office space could go as fast as firms seek quality
The surge in the supply of new office space over the next two years is likely to be absorbed fairly quickly as firms want high-quality facilities, property consultancy Cushman & Wakefield said yesterday.
It also noted that the technology sector was quickly becoming one of the biggest drivers of demand.
“Unlike in previous years during boom times, office tenants last year were mainly driven by relocations to better-value propositions in newer buildings, rather than the need to up size,” said Cushman & Wakefield research head Christine Li.
Calling this trend a “flight to quality”, she said Grade A office rents may climb a further 5 per cent to 6 per cent this year.
Office rents in the Central Business District (CBD) shot up 14 per cent last year, the biggest increase in Asia, according to consultancy JLL. But analysts reckon that a bumper crop of new office completions over the next two years could put a lid on rents.
About 1.15 million sq ft of new space will come on stream in Singapore this year, with the figure rising to 1.6 million sq ft next year and 4.7 million sq ft in 2017, according to a Bloomberg report earlier this month that cited real estate broker Knight Frank.
Ms Li yesterday said 62 per cent of Cushman’s leasing deals that were each for at least 25,000 sq ft last year involved relocations within Singapore, most of which were from older buildings to newer premium office space.
The remaining 38 per cent of its leasing deals for Grade A office space and business parks in Singapore were lease renewals and for new entrants.
“Some tenants took advantage of the more efficient floor plates by consolidating their spaces in the newer buildings, which come with large column-free spaces that allow more effective layout of work stations,” said Ms Li, adding that this has led to strong take-up rates for the newly completed offices.
These include Marina Bay Financial Centre Tower 3, Asia Square Tower 2, CapitaGreen and South Beach.
Ms Li said that CapitaGreen’s occupancy rate is close to 70 per cent while South Beach is about 80 per cent leased.
The rapidly growing tech sector has been increasingly snapping up Grade A office space in the CBD, while the financial industry’s share has shrunk.
Ms Li said tech companies have “more than doubled their presence” in the Grade A office market over the past 12 months. They accounted for about 15 per cent of office demand last year, up from 6 per cent in 2013.
The amount of office space that tech firms occupy has also expanded to more than 300,000 sq ft last year, from around 160,000 sq ft the year before.
One entrant last year was LinkedIn, which moved into two floors at Marina Bay Financial Centre given up by Barclays.
“As technology companies… accelerate the expansion of their reach across Asia, they will be the market darling for office leasing in the CBD,” Ms Li noted.
That trend looks set to continue this year.
City Developments last week said Facebook will be the anchor tenant of the 34-storey office tower at its South Beach project, taking up 70,000 sq ft.
The social media giant will move there later this year from its premises at 158 Cecil Street.
In contrast, though the financial industry still dominates the CBD, its portion of market demand for office space fell from 41 per cent in 2013 to 30 per cent last year.
Banks and other financial institutions also slashed their office space sharply, from 1.1 million sq ft in 2013 to slightly more than 600,000 sq ft last year.
Source: The Straits Times 26 Feb 2015
Singapore Real Estate Market News
SINGAPORE – Wheelock Properties (Singapore) is facing headwinds on two fronts.
In China, the upmarket developer has set aside an allowance for diminution in value of $75 million on the Fuyang project.
In Singapore, the fair value of its investment in Scotts Square Retail was cut by $52 million to $260 million.
These investments accounted for the lion’s share of other operating expenses in the fourth quarter, amounting to $132.9 million. This is 15.4 per cent higher compared to the same period last year.
Source: The Straits Time 24 Feb 2015
Singapore Real Estate Market News
Singapore realty company launches Islamic villa project
on donated land
(MENAFN – Gulf Times) A Singapore property investment company linked to the Islamic Religious Council of Singapore, Warees Investment, has launched the city state’s first Islamic endowment villas on a land plot off Sixth Avenue, one of the most sought-after residential areas in Singapore. They villas will be built on land dedicated as “wakaf”, which means it has been bequeathed or willed by a Muslim towards religious or charitable uses. The land parcel, around 2,900 square meters in size, was bequeathed in 1905 and also houses a 110-year-old mosque, Masjid Al Huda.
According to the developer, the Alias Villas project will comprise of six luxury villas and a swimming pool, will have between 280 and 340 square meters in living space and will be sold for around 3.7mn each. The proceeds from the sale will be used to fund the current upgrading of the nearby mosque, Haider M Sithawalla, chairman of Warees Investments’ board of directors, said at the recent presentation of the project, stressing that the mosque is the sole beneficiary of the development. The three-story villas will be ready in 2017, and the land will have a 99-year lease.
“The idea (of the villas) is to unlock the value of our wakaf,” said Singapore’s Minister-In-Charge of Muslim Affairs, Yaacob Ibrahim, adding that “we’ve been able to maximize it to generate further income for the mosque and for the beneficiaries of the wakaf.”
Not known to many, wakaf as a practice of religious endowment has a long history in Singapore. It was introduced by Arab merchants two centuries ago, and since then many wakaf were donated by Arab and Indian Muslims. The first mosque on such land, Omar Mosque, was built in 1820 and is today the city state’s oldest mosque.
There are currently over 100 wakaf properties in Singapore at a value of 430mn, according to the Islamic Religious Council. They consist of residential properties, services apartments, residences, commercial properties and, of course, mosques, as well as one madrasa. The villa project is the first of its kind.
The Islamic Religious Council of Singapore was established as a statutory body in 1968 and advises Singapore’s president on all matters relating to Islam. It manages around 90% of wakaf properties in Singapore while the rest is being held by trustees. The council is also in charge of religious education and administration of madrasas, halal certification, construction of new mosques, pilgrimage affairs and other activities related to the promotion of religious, social, educational, economic and cultural activities in accordance with the principles and traditions of Islam. It is also the body to issue fatwas and supervises the obligatory donations of zakat among Muslims by a centralized and computerized collection system.
According to latest census data, around 15% or some 820,000 people in Singapore are Muslims, the second largest religious group behind Buddhists (34%) and Chinese Taoists (11%). There are two major groups, Muslims of Malay origin and Muslims of Indian origin, with the others being of Chinese, Eurasian, Arab and Central Asian origin. There are 69 mosques in Singapore and six full-time madrasas.
Source: MENAFN – Gulf Times – 24/02/2015