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Singapore Real Estate Market Review April 2008
real estate market review april 2008 Download this article
Introduction – Monthly Property Market Update for April 2008
The picture of apparent calm in April belied a suppressed tension beneath. In fact, bad news outweighed the good ones by two-to-one; and the weight of negativity added to the body of evidence that the property market in Singapore is heading down a slippery path.
Externally, the big ship of the United State is leaking and there aren’t enough safety boats for everyone. So, many investors / speculators looked set to end up in the icy water.
- New feature – Skill Enhancement Tips - [See Annex A for details]
From May onwards, the market update will come with a “Skill Enhancement Section” where new agents will be taught how to use the latest market information to answer customer’s questions.
- The Most Sellable Projects in District 15 - [See Annex C for details]
- Contents of the Monthly Update
(A) Uncertainties reign in the larger market
- (A.1) US Federal Reserve cut rate again
- (A.2) Is the US in recession or is it not?
- (A.3) IMF paints pessimistic forecast for US economy
- (A.4) The aftermath of the Bear Stearns collapse
- (A.5) Singapore inflation rises 6.7% in March 2008 - 26-year high
(B) Private Property Sale in Singapore
- (B.1) Sale prices and rental of private residential properties rose amidst thin volume
- (B.2) Increased in unlaunched and unsold new homes in the first quarter of 2008
- (B.3) Developers testing water with some new launches
- (B.4) Far East Organisation cut prices of some new homes - A sign of all things to come?
- (B.5) Singapore is the world’s eighth most expensive city
- (B.6) Performance of Sub-Sale Market
- (B.7) Fewer landed property transactions from January 2008 onwards
(C) Rents across all property sectors continue upward trend
- (C.1) Singapore residential rentals 5th highest in Asia
- (C.2) Rentals of Singapore private homes rose 6.0% in 1Q 2008
- (C.3) Flatted factory rents boosted by office space crunch
- (C.4) Office property prices edge up by just 1.1% in 1Q
(D) News on en bloc sales
- (D.1) More en bloc deals are abortive due to uncertainties ahead
- (D.2) Regent Garden to go through after High Court’s ruling
- (D.3) Airview Towers to go through
(E) Foreign interest in commercial buildings in Singapore
(F) News on GLS programme
(G) Analysis on HDB resale transactions
- (G.1) HDB resale transactions
- (G.2) HDB buyers paying less COV
- (G.3) HDB Rents are rising fast
- (G.4) Transactions of HDB Resale market in April 2008
(A) Uncertainties reign in the larger market
- (A.1) US Federal Reserve cut rate again
On 30 April 2008, the US Federal Reserve once again lowered the US interest rates by a modest quarter percentage point. The interbank rate is now pegged at 2%, the lowest since December 2004. It was the seventh cut in a campaign that has brought the key lending rate down by 3.25 percentage points since mid-September.
The Fed has said that the cut might be the last and this may mean that policy-makers were now willing to sit back to see if the economy is responding to the medicines.
- (A.2) Is the US in recession or is it not?
Are they or are they not in recession? It is anybody’s guess. Why not look at the numbers as they seldom lie.
The consumer confidence in the US has fallen to 62.6 for a third straight month, hitting its weakest point in 26 years. This can be due to heightened worries over inflation and the sagging housing market.
More consumers reported that their personal financial situation was worse than any time since 1982 due to high fuel and food prices, as well as shrinking income gains and widespread reports of declines in home values.
On the other hand, the first quarter economy in the US grew 0.6%. Analysts now believe that with the slight growth, the widely-expected recession will happen in the next quarter.
On the housing front, record-high foreclosures dumped more unsold homes on the market in the first quarter of 2008. This has added builders' headaches as they slashed spending on housing projects by a whopping 26.7%, on an annualised basis, the most in 27 years which sent the economy further down the abyss.
On the spending side, consumers spending rose at just a 1%, down from a 2.3% growth rate and was the slowest since the second quarter of 2001, when the US was in its last recession.
Higher energy and food prices are shrinking people's pocket, curtailing their spending power and the credit crunch also has made it harder for people to finance big-ticket items, such as cars and homes.
- (A.3) IMF paints pessimistic forecast for US economy
According to the International Monetary Fund (IMF), the financial crisis in the US has moved into new phases. But the worst of the US banking and economic crisis may not yet be over, although the risk of a financial meltdown has passed.
Downside risks are still huge from the interaction between the weak financial system and the weakening real economy. The US housing market could get weaker for at least another year while unemployment is rising, as are the risks of corporate defaults.
The IMF forecasts that US GDP growth will slow to 0.5% this year (from 2.2% in 2007) and the economy 'could tip into mild recession' before recovering gradually in 2009. Under this scenario, the IMF estimates that total losses for the US financial system arising from the sub-prime crisis (but including losses in non-sub-prime related areas) would total US$945 billion. Furthermore, the IMF said that if the US recession were deeper and longer, the losses 'could be substantially larger'.
- (A.4) The aftermath of the Bear Stearns collapse
The US Securities and Exchange Commission, responding to the collapse of Bear Stearns, may require Wall Street banks to keep more cash on hand during periods of market stress. The agency is also reviewing whether securities firms should seek new loans to support their 'less-liquid positions'.
However, some analysts noted that any change may crimp Wall Street profits because firms would have to hold more cash and low-yielding securities instead of lending money or making investments.
The agency currently requires that those firms have enough funding to meet expected obligations for at least one year during periods of market turmoil but that requirement did not prevent the 'unprecedented' situation at New York-based Bear Stearns, which could not secure loans even if it offered to put up 'high-quality’ collateral.
[For more details on how the other leading financial institutions in the world fare, see Annex B]
- (A.5) Singapore inflation rises 6.7% in March 2008 - 26-year high
Singapore’s inflation accelerated to 6.7% in March from 2007 to a 26-year high as higher food, transport and housing costs lifted consumer prices.
According to the Department of Statistics, consumer prices in March 2008 rose 0.3% from February after seasonal adjustments. On a three-month moving average, the consumer price index (CPI) was up by 0.6%.
Economists had expected annual consumer prices to rise above January's high of 6.6% - the highest level since 7.5% in March 1982 - due to record energy and food prices.
To fight imported inflation, the Monetary Authority of Singapore (MAS) had again in April strengthened the Singdollar further against the Greenback.
(B) Private property sales in Singapore
Patience is wearing out fast. While the “wait-and-see” attitude is still prevalent, a few major developers such as the Far East Organisation and Wing Tai are already coming down from the fence and foraged into the unknown territory with their usual tactic – slashing prices. However, the overall private new home market still looked listless, though asking prices are generally high.
- (B.1) Sale prices and rental of private residential properties rose amidst thin volume
Prices of private residential, office, shop and industrial properties increased by 3.7%, 1.1%, 2.6% and 3.4% respectively in the 1st Quarter 2008.
Rentals of private residential, office, shop and industrial properties increased by 6.0%, 7.3%, 1.0% and 5.7% respectively in the 1st Quarter 2008.
The rates of increase in prices for all properties and the rates of increase in rentals for private residential, office and industrial properties have moderated in the 1st Quarter 2008 as compared to 4th Quarter 2007.
Non-Landed Properties
Prices of non-landed properties across the island have risen slightly in the first quarter. However, when compared with the last quarter, the growth was much smaller. Below shows the price growth of non-landed private homes quarter-on-quarter by regions:
Table [ 1 ] price growth of non-landed private homes by regions
Regions |
1Q08 |
4Q07 |
3Q07 |
Core Central Region (CCR) |
3.8% |
4.4% |
7.5% |
Rest of Central Region (RCR) |
3.3% |
3.9% |
7.7% |
Outside Central Region (OCR) |
3.8% |
4.8% |
7.0% |
Source of information: URA
Landed Properties
Prices of landed properties rose 3.9% in the 1st Quarter 2008, compared with the 4.2% increase in the previous quarter. Prices of detached, semi-detached and terrace houses rose 3.5%, 4.7% and 4.0% respectively in the first quarter of 2008.
Rentals of private residential properties also rose but the growth was smaller when compared to the previous quarter. This shows that the rental market could be in similar decline.
- (B.2) Increased in unlaunched and unsold new homes in the first quarter of 2008
The number of new homes that has been held back from public launches has increased to 10,239 in the first quarter of 2008, an increase of 44.2% over the 7,099 units in the fourth quarter of last year [B.2.(a)].
The Urban Redevelopment Authority's (URA) property data for the quarter revealed that there were 2,526 homes launched, but remain unsold at the end of the first quarter of 2008, an increase of 22.4% over the previous quarter.
It appears that if the market lull persists, the backlog of unsold could pose a potential over-supply situation in the future; but drawing from previous experience, not all the developers will rush to build. Those with deeper pockets may hold on to the land for more than 10 years
- (B.3) Developers testing water with some new launches
Floridian condo in Bukit Timah
Far East Organization's listed unit Orchard Parade Holdings and Wing Tai have begun the official launch of their Floridian condo in Bukit Timah. The average net price is in the range of $1,600 to $1,700 psf after discounts.
The freehold project has 336 units in 11 towers on a site of 230,000 sq ft but only 75 units in Towers 2 and 9 have been launched. The project is near good schools / junior colleges, and the Canadian International School.
Quartet on Vanda
It is a freehold cluster development of four bungalows in Vanda Crescent off Dunearn Road (near Eng Neo Avenue). Built-up areas range from 4,844 sq ft to 4,919 sq ft. The units are reportedly priced around $6 million each. Each two-storey unit has an attic, a basement and a swimming pool.
Parc Seabreeze
In Marine Parade, developer Tiong Aik has begun the preview of Parc Seabreeze. The average price for the freehold project is understood to be in the $1,600-1,700 psf range.
- (B.4) Far East Organisation cut prices of some new homes - A sign of all things to come?
FEO has slashed the prices of three 99-year leasehold projects in the outlaying areas by about 3% to 5%. The three developments are (1) La Casa executive condo in Woodlands, (2) The Lakeshore in Jurong West, and (3) Hillview Regency in Bukit Batok.
FEO has reportedly sold 50-plus units at The Lakeshore, around 20 units at Hillview Regency as well as the last 20-odd units at La Casa following the price cuts.
- (B.5) Singapore is the world’s eighth most expensive city
When it comes to luxury homes in prime locations, Singapore had the eighth-most expensive properties in the world in 2007, ahead of other Asian cities.
Average prices of top-end properties in the Republic rose by 31% to £1,197 (S$3,232) per sq ft (psf), according to a survey by Knight Frank and Citi Private Bank.
Table [ 2 ] The cities having the most expensive luxury homes in the world
Ranking |
Location |
Country |
£ per sq ft |
1 |
London |
Britain |
3,025 |
2 |
Monaco |
Monaco |
2,877 |
3 |
St Jean Cap Ferrat |
France |
2,860 |
4 |
Courchevel |
France |
2,302 |
5 |
Manhattan (New York) |
United States |
2,111 |
6 |
Cortina D’Ampezzo |
Italy |
1,480 |
7 |
Portofino |
Italy |
1,315 |
8 |
Singapore |
Singapore |
1,197 |
9 |
Tokyo |
Japan |
1,141 |
10 |
Verbier |
Switzerland |
1,136 |
Other global cities which ranked behind Singapore included Moscow (11th), Hong Kong (13th), Sydney (15th) and Paris (16th).
- (B.6) Performance of Sub-Sale Market
The total number of sub-sales fell to 346 in 1st Quarter 2008, compared to 649 sub-sales in the previous quarter. The decline in sub-sale transactions reflected a bearish market sentiment as a result of the uncertainties in the job market and the global economy.
Below shows the significant drop in sub-sale activities across the island quarter-on-quarter.
Table [ 3 ] - Comparison of sub-sale activities in Core Central Region (CCR) between 1Q 08 and 4Q 07
Period |
New sale |
Sub-sale |
Resale |
Total |
Sub-sale as % of total |
||
Uncompleted |
Completed |
Sub-Total |
|||||
4Q2007 |
418 |
23 |
441 |
288 |
543 |
1,252 |
21.4% |
1Q2008 |
219 |
4 |
223 |
134 |
288 |
645 |
20.8% |
Source of information: URA
Table [ 4 ] - Comparison of sub-sale activities in the Rest of Central Region (RCR) between 1Q 08 and 4Q 07
Period |
New sale |
Sub-sale |
Resale |
Total |
Sub-sale as % of total |
||
Uncompleted |
Completed |
Sub-Total |
|||||
4Q2007 |
554 |
4 |
558 |
237 |
958 |
1,753 |
13.5% |
1Q2008 |
201 |
1 |
202 |
115 |
583 |
900 |
12.8% |
Source of information: URA
Table [ 5 ] - Comparison of sub-sale activities in the Outside Central Region (OCR) between 1Q 08 and 4Q 07
Period |
New sale |
Sub-sale |
Resale |
Total |
Sub-sale as % of total |
||
Uncompleted |
Completed |
Sub-Total |
|||||
4Q2007 |
425 |
25 |
450 |
144 |
1,760 |
2,354 |
6.1% |
1Q2008 |
310 |
27 |
337 |
97 |
1,087 |
1,621 |
6.4% |
Source of information: URA
- (B.7) Fewer landed property transactions from January 2008 onwards
For the first quarter of 2008, according to caveats lodge, there were 502 landed property transactions, comprising – 67 detached houses, 118 semi-detached houses, and 317 terrace houses. The landed property transactions in the first quarter of 2008 were spread over the following localities:
Table [ 6 ] – Landed property transactions in the First Quarter of 2008
District |
Transactions |
District |
Transactions |
District |
Transactions |
District |
Transactions |
D1 |
0 |
D8 |
5 |
D15 |
74* |
D22 |
7 |
D2 |
1 |
D9 |
4 |
D16 |
51 |
D23 |
12 |
D3 |
0 |
D10 |
38* |
D17 |
13 |
D24 |
0 |
D4 |
2 |
D11 |
14 |
D18 |
2 |
D25 |
6 |
D5 |
15 |
D12 |
7 |
D19 |
79 |
D26 |
10 |
D6 |
0 |
D13 |
28 |
D20 |
46 |
D27 |
9 |
D7 |
0 |
D14 |
25 |
D21 |
20 |
D28 |
34 |
Source of information: SISVRealink
In District 10, there were a total of 16 detached house transactions; 16 semi-detached house transactions; and six terrace house transactions. The information on prices is as follows:
Table [ 7 ] – Landed property transactions in District 10 in the First Quarter of 2008
Type |
Transactions |
Sale price |
Unit land price |
||||
Highest |
lowest |
median |
Highest |
Lowest |
median |
||
Detached |
16 |
$25.28m |
$1.68m |
$11.3m |
$1,194 |
$105 |
$960 |
Semi-D |
16 |
$7.11m |
$1.6m |
$3.1m |
$1,360 |
$577 |
$1,036 |
Terrace |
6 |
$4.23m |
$2.00m |
$2.2m |
$1,993 |
$748 |
$996 |
Source of information: SISVRealink
In District 15, there were a total of five detached house transactions; 12 semi-detached house transactions; and 57 terrace house transactions. The information on prices is as follows:
Table [ 8 ] – Landed property transactions in District 15 in the First Quarter of 2008
Type |
Transactions |
Sale price |
Unit land price |
||||
Highest |
lowest |
median |
Highest |
Lowest |
median |
||
Detached |
5 |
$9.30m |
$2.08m |
$3.80m |
$1,007 |
$609 |
$665 |
Semi-D |
12 |
$5.5m |
$1.58m |
$2.80m |
$997 |
$472 |
$682 |
Terrace |
57 |
$3.00m |
$670k |
$1.35m |
$1,193 |
$66 |
$643 |
Source of information: SISVRealink
The landed property transactions in April 2008 were spread over the following localities:
Table [ 9 ] – Landed property transactions in April 2008
District |
Transactions |
District |
Transactions |
District |
Transactions |
District |
Transactions |
D1 |
0 |
D8 |
0 |
D15 |
14 |
D22 |
0 |
D2 |
0 |
D9 |
3 |
D16 |
12 |
D23 |
6 |
D3 |
0 |
D10 |
7 |
D17 |
4 |
D24 |
0 |
D4 |
0 |
D11 |
5 |
D18 |
2 |
D25 |
1 |
D5 |
2 |
D12 |
0 |
D19 |
30 |
D26 |
8 |
D6 |
0 |
D13 |
8 |
D20 |
14 |
D27 |
3 |
D7 |
0 |
D14 |
5 |
D21 |
3 |
D28 |
6 |
Total Transactions |
133 |
Source of information: SISVRealink
Apparently, District 19 has become the new hot spot due to the presence of two good international schools and the increasing number of expatriates living there. The other two darlings of landed housing areas, i.e. D10 and D15 continue to do well regardless of the market situation.
(C) Rents across all property sectors continue upward trend
The larger economy continues to provide the critical factor in the rental market. As it is, the Singapore economic fundamentals are intact and this could be seen from the healthy performance of the rental markets, though there were signs showing that residential rents may ease off from the middle of this year onwards due to the higher supply expected from the new projects receiving their TOP [Explanation of TOP at Annex A].
- (C.1) Singapore residential rentals 5th highest in Asia
According to a recent survey by ECA International, Singapore’s residential rental rates for a three-bedroom apartment is the fifth most expensive rent in Asia and ninth globally. The residential rents have increased by 33% over a year - from 2006 to 2007 – also the largest increase in Asia.
The survey finding attributes the steep rise to rising demand and limited supply as companies are expanding their operations in Singapore together with government initiatives to attract skilled workers from overseas.
But at the same time, the supply of property available has been limited by a number of factors such as en bloc purchases by developers, which have exacerbated the situation. In addition, the exchange-rate fluctuations also make a difference. Rental prices have gone up as the Singdollar has strengthened against the US dollar in recent months.
Table [ 10 ] - Six of the top 10 most expensive locations in the world are in Asia
1st |
Hong Kong |
6th |
Mumbai |
2nd |
Moscow |
7th |
Seoul |
3rd |
New York |
8th |
Caracas |
4th |
Tokyo |
9th |
Singapore |
5th |
London |
10th |
Ho Chi Minh City |
Average rental prices in Asia are around US$3,820, the global average is about US$2,950.
- (C.2) Rentals of Singapore private homes rose 6.0% in 1Q 2008
Rentals of private homes rose 6.0% in the first quarter this year, compared with the 6.8% increase in the previous quarter. The table below shows the rental growth of private homes quarter-on-quarter:
Table [ 11 ] – Rental growth across the island quarter-on-quarter
Regions |
1Q08 |
4Q07 |
Core Central Region (CCR) |
4.8% |
5.3% |
Rest of Central Region (RCR) |
6.7% |
8.8% |
Outside Central Region (OCR) |
8.4% |
8.5% |
All Residential |
6.0% |
6.8% |
The detailed breakdown of rental for different private home types is as follow:
Table [ 12 ] – Rental growth of different house types quarter-on-quarter
House types |
1Q08 |
4Q07 |
Detached houses |
3.6% |
7.3% |
Semi-detached |
8.6% |
7.1% |
Terrace houses |
8.7% |
7.1% |
Non-landed property |
5.9% |
6.7% |
- (C.3) Flatted factory rents boosted by office space crunch
Since the third quarter of last year, the light industrial factory segment has begun to experience some of the spill-over effects of the office space crunch.
Monthly gross rents of prime conventional flatted factories in central Singapore for the first quarter of 2008 increased by 11.8% for ground floor space and 10.6% for upper floor space on a quarter-on-quarter (QoQ) basis to $2.36 psf and $1.77 psf respectively.
Some of the demands are likely to come from the service industries including design agencies, IT-related support firms, and engineering firms and demand for such space was so high that newer and more modern flatted factories such as Cendex Centre and E-Centre commanded average monthly gross rents of $3.20-$4 psf in the first quarter of 2008.
For the rest of the year, rents for conventional factories could go up by some 10% to 15%; whilst rents for high-specification industrial space and business park space will rise up to 20% for the rest of the year due to the spill-over demand from the office sector.
Average monthly gross rents for high-specification industrial space rose 16% in the first quarter of 2008 to $3.98 psf with popular space in Alexandra Road and Changi Business Park commanding average monthly gross rentals of around $4.80 psf.
Strong demand for logistics space from third party logistics service providers and industrialists also saw average monthly gross rents of prime warehouse space rising 13% for ground floor space and 7.5% for upper floor space in the first quarter of 2008 to $2.35 psf and $1.72 psf respectively.
- (C.4) Office property prices edge up by just 1.1% in 1Q
Office property prices showed signs relenting in the first quarter of 2008, with foreign investors either withdrawing from the market or demanding lower prices.
The Urban Redevelopment Authority (URA) reported that office property prices grew a marginal 1.1% in the first quarter of 2008, compared with an 8% increase in the previous quarter.
The office sector has been hurt by the global credit crunch, and the worries over impending new supply post-2010.
(D) News on En bloc Sale
The en bloc sale scene was a picture of gloom as more and more projects which were sold earlier started to fall through. Had it not for the High Court’s stringent view on contract obligations more en bloc deals would have been aborted.
- (D.1) More en bloc deals are abortive due to uncertainties ahead
The collective sale of Finland Gardens in Siglap has fallen through. The move comes amid a flat market for private homes, with both buyers and sellers being very cautious. In the Finland Gardens case, both the majority sellers and the buyer, Sing Holdings, mutually agreed to let the deal die off.
- (D.2) Regent Garden to go through after High Court’s ruling
The stop-start en bloc sale of Regent Garden, a 31-unit West Coast Road condominium, to Allgreen Properties looks set to finally go through after the High Court directed the majority owners to complete the agreement.
The agreement with Allgreen, originally signed in April last year, was first delayed when six owners out of the 31 held out.
- (D.3) Airview Towers to go through
The Court of Appeal has overturned the ruling by the High Court and Strata Titles Board (STB) on the collective sale of Airview Towers, paving the way for mainboard-listed Bukit Sembawang Estates to acquire the property for $202 million.
Located at St Thomas Walk, Airview Towers became the subject of a civil appeal after a resident objected to the collective sale, arguing that the minimum 80% majority consent needed was not met in time.
(E) Foreign interest in commercial buildings in Singapore
- (E.1) Foreign investors are getting smarter with prospect of better bargain on the horizon
Gulf Arab exporters awash with cash from record oil income have put the brakes on foreign asset buys as the global credit crisis promises more bargains later and the political spotlight falls on how they invest.
Fear of domestic inflation has caused gulf states to find other alternatives investments to park their money. After a two-year buying spree in Asia, it does not take a mathematician to figure out that the current credit squeeze will soon throw up some real bargains in the real estate arena.
There has been a widespread anticipation by sovereign wealth funds that financial assets will depreciate further as the credit turmoil deepens in the West.
Acquisitions outside of the region by Gulf Arab buyers are down by more than 30% from the fourth quarter of 2007 onwards. A year ago, the Gulf states spent around US$89.13 billion acquiring real estate everywhere in the globe.
- (E.2) Record $3,125 psf paid for office building in volatile market
Commerz Real, a fully-owned subsidiary of Germany's Commerzbank, has bought 71 Robinson Road, setting a record commercial transaction in Singapore.
Although the price was not disclosed, sources say it was $3,125 per sq ft of net lettable area (NLA), or $743.8 million. This is 7.7% higher than the $2,900 psf of NLA paid for Hitachi Tower in January 2008.
Commerz Real is the buyer who bought 78 Shenton Way in December 2007 for $650 million or $1,857 psf of NLA.
By some reckoning, 2007 saw core funds acquire at least 10 office assets held by opportunistic funds. Larger deals include that by CLSA, which sold the SIA Building to German pension fund SEB. At least another 13 office assets could be targets for core funds, including DBS Towers 1 and 2.
(F) News on Government Land Sale (GLS) Programme
The response to the GLS programme gives a good indication of developers’ sentiment. In this lull market, unless the site on offer has superb qualities or else it will be given the cold shoulder. Even if there were multiple bids, the URA may not award the site to the highest bidder due to what the authority considers ‘low price’. In a nutshell, the lukewarm response to the GLS programme in the first quarter of 2008 signals the advent of a slower growth period.
- (F.1) URA decides not to award Ten Mile Junction site
The URA had rejected the bid by Peak Green for a residential site at Choa Chu Kang/ Woodlands Road as the $61m or $162 psf ppr offered was considered by URA to be ‘too low’. The value of the site, on which the state-owned Ten Mile Junction currently sits, is thought to be worth between $200 psf ppr and $250 psf ppr.
The 15,645 sq metre (168,403 sq ft) site has a potential residential gross floor area (GFA) of 254,394 sq ft, which can house between 200 and 240 flats or serviced apartments.
- (F.2) Phase Two of Sembawang Greenvale
All the 11 parcels of Phase Two of Sembawang Greenvale were sold for a total of $45.29 million or $223 per sq ft (psf) on average. The 12 plots of land in nearby Phase One were also fully sold when they were launched in October 2007 for about $285 psf on average. Comparing the two phases, the winning bid prices for Phase Two plots were 22% lower on average than the Phase One plots nearby.
Smaller developers and individuals turned up in force to bid for the phase two plots, which can yield 90 dwellings - one bungalow, 16 semi-detached houses and 73 terraced houses.
- (F.3) Transitional office site in Newton draws 8 offers
A prime transitional office site in Newton attracted eight bids. Broking house UOB Kay Hian emerged the winner with an offer of $34 million or $242.5 psf of gross floor area.
To some analysts, this is a clear reminder that the demand for office space remains high. Tight office supply and strong demand have sustained the growth in rentals.
(G) News on HDB Resale Market
- (G.1) HDB resale transactions
Transactions of resale HDB flats stood at 6,360 in the first quarter of 2008, against the backdrop of rising asking prices and high cash-over-valuation (COV) demands.
When compared with the same period last year, the first quarter transactions were higher. Compared month-on-month, the transaction figure in April 2008 was 2,339 - the highest in this year.
Traditionally, the rush is at the end of the year where more buyers would request the handing-over of the flats before Chinese New Year (CNY). Once potential buyers know that they would not be able to meet the CNY target date, they tend to slow down the purchase – hence the usual lull in the first quarter of the year.
The table below shows that in the first quarter of 2007, the sale figure was also very low. When compared, the first quarter of 2008 did better than the same time last year – which may be read as a sign of an improving HDB resale market.
Table [ 13 ] – The quarterly performance of HDB resale flats since 1Q 07
Period |
3-room |
4-room |
5-room |
E-Flats |
Total (includes 1- & 2-room flats) |
1Q07 |
1,908 |
2,365 |
1,402 |
511 |
6,258 |
2Q07 |
2,390 |
3,091 |
2,305 |
854 |
8,708 |
3Q07 |
2,179 |
2,833 |
1,901 |
738 |
7,722 |
4Q07 |
1,945 |
2,525 |
1,667 |
524 |
6,748 |
1Q08 |
1,845 |
2,415 |
1,574 |
453 |
6,358 |
- (G.2) HDB buyers paying less COV
The latest HDB statistics showed that median cash-over-valuation (COV) prices in many popular estates like Marine Parade, Queenstown and Clementi have come down.
One example is in Bukit Batok where home-owners in Bukit Batok used to demand nothing less than $50,000 cash upfront just six months ago. In the last month, however, this had dipped to about $20,000 to $30,000.
The drop in COV was due largely to valuations of HDB homes rising sharply to reflect more accurately prevailing market prices.
In the most recent quarter, the median price went up to $450,000. However, the COV fell to $30,000, which meant that the valuer had valued the flat higher at $420,000.
Another reason for the decrease in COV could be that sellers' expectations have moderated due to the recent softening of the property sector, coupled with volatile global markets.
A lower COV simply means lower demand for HDB resale flats for the time being. It also means that buyers of resale HDB flats only need to fork out lower upfront cash; they can use their CPF savings to pay for the rest of the down-payment.
- (G.3) HDB Rents are rising fast
More flat owners are applying for HDB’s approval for whole flat sub-letting. And in the meantime, the median rent for HDB flats is rising.
Rents for some executive flats in Queenstown have gone as high as $2,900 a month. At close to $3,000 a month and without the luxury offering of a swimming pool or gym, the price would have been impossible two years ago. How things have transformed over such a short time.
The table below shows a comparison between rents collected recently in selected areas with rents collected in the same areas in early part of last year. There have been marked increases in the rental.
Table [ 14 ] - Comparison of rents of HDB flats [for 3 bed-room rented] between early 2007 and early 2008
Period |
Location |
Rents |
Period |
Location |
Rents |
12/07 |
Kim Tian Blk 119C |
$2,250 |
05/07 |
Kim Tian Blk 121 |
$1,550 |
12/07 |
Bt Purmei Blk 106 |
$2,400 |
02/07 |
Telok Blangah Blk 59 |
$1,500 |
12/07 |
Tampines Blk 864A |
$1,700 |
02/07 |
Tampines Blk 842F |
$1,100 |
12/07 |
Clementi St 13 Blk 111 |
$2,200 |
02/07 |
Clementi St 13 |
$1,200 |
01/08 |
Holland Ave Blk 2 |
$1,650 |
02/07 |
Holland Blk 11 |
$1,200 |
01/08 |
Yishun central Blk 325 |
$2,000 |
02/07 |
Yishun Blk 864 |
$1,100 |
01/08 |
Serangoon Nth Blk 123 |
$2,350 |
02/07 |
Serangoon Blk 236 |
$1,400 |
01/08 |
Canberra Rd Blk 422 |
$1,900 |
03/07 |
Canberra Rd Blk 423 |
$1,500 |
01/08 |
Jurong West Blk 834 |
$2,000 |
02/07 |
Jurong West Blk 552 |
$1,400 |
01/08 |
Bt Batok St 22 Blk 297 |
$2,000 |
02/07 |
Bt Batok W Blk 146 |
$1,100 |
Source of information: INFO-TOOLS Monthly Transacted Guide
- (G.4) Transactions of HDB Resale market in April 2008
Below shows the most current HDB resale transactions in April 2008 and the figures can be compared with previous months’ transactions to gauge the prevailing market sentiment.
Table [15] – April 2008 HDB resale transactions
|
3-room |
4-room |
5-room |
E-Flats |
Total |
Ang Mo Kio |
86 |
24 |
7 |
5 |
122 |
Bedok |
50 |
35 |
24 |
9 |
118 |
Bishan |
5 |
37 |
12 |
4 |
58 |
Bt Batok |
50 |
53 |
15 |
5 |
123 |
Bt Merah |
37 |
39 |
26 |
0 |
102 |
Bt Panjang |
4 |
49 |
25 |
2 |
80 |
Bt Timah |
0 |
3 |
5 |
1 |
9 |
Central Area |
6 |
2 |
0 |
0 |
8 |
Choa Chu Kang |
4 |
69 |
40 |
14 |
127 |
Clementi |
29 |
19 |
10 |
4 |
62 |
Geylang/Aljunied |
30 |
17 |
11 |
3 |
61 |
Hougang |
39 |
50 |
26 |
7 |
122 |
Jurong East |
23 |
16 |
20 |
4 |
63 |
Jurong West |
47 |
87 |
46 |
9 |
189 |
Kallang Whampoa |
38 |
13 |
7 |
0 |
58 |
Marine Parade |
10 |
1 |
9 |
0 |
20 |
Pasir Ris |
0 |
43 |
20 |
19 |
82 |
Punggol |
0 |
19 |
38 |
1 |
58 |
Queenstown |
42 |
13 |
16 |
3 |
74 |
Sembawang |
0 |
21 |
33 |
4 |
58 |
Sengkang |
0 |
33 |
61 |
12 |
106 |
Serangoon |
15 |
21 |
11 |
6 |
53 |
Tampines |
40 |
66 |
43 |
24 |
173 |
Toa Payoh |
35 |
28 |
12 |
1 |
76 |
Woodlands |
24 |
90 |
75 |
21 |
210 |
Yishun |
50 |
61 |
10 |
6 |
127 |
Total |
664 |
909 |
602 |
164 |
2,339 |
Table [ 16 ] – Comparison of HDB resale transactions from January to March 2008
|
3-room |
4-room |
5-room |
E-Flats |
Total |
March 2008 |
613 |
806 |
569 |
162 |
2,150 |
February 2008 |
635 |
768 |
495 |
146 |
2,044 |
January 2008 |
680 |
837 |
597 |
192 |
2,306 |
Annex A
How to react to tough questions using the latest market information
Customer |
Tell me Agent, is the market that bad? How come my property can’t sell? |
Agent |
To put it in proper perspective, the market fundamentals are still good with all the excitements coming up in 2010 and beyond. But within the next six to nine months [up to mid-2009], the property market will not be able to absorb more than 30,000 new condos and condos receiving their TOP*. In fact, by 2012, there will be a total of 67,736 new condo/apartments to be sold by the developers. (See [B.2.(a)] for figures) Up to now, out of the 67,736 potential supplies, 42,685 units are still not sold yet. In a boom year, the market can take up to around 20,000 new condos/apartments a year; but 2008 cannot be considered a good year as far as the property market is concerned. The truth is, with the figures openly available to all potential buyers, I don’t think any buyers in their right mind will rush in now. They are right now window-shopping. |
Customer |
But my house is unique you know! You must tell those people who call you that they cannot find another house to match mine in terms of quality and potential. |
Agent |
Yes sir, I agree with you. You house is unique. Not everybody can spot the value when they are spoiled with so many available CHOICES in the market right now. I have to persuade them to come and view the property. Many of them decided to give our listing a miss due to the high asking price. The buyers have their own idea which way the prices are going to move in the short term. Which direction do you think the price will be moving towards in the next 3 to 6 months? Up or down? |
Customers |
Of course the price is moving up! [Sellers will go on and on to explain to agents how the Youth Olympic, F1 night grand prix, Singapore Flyers, the casino will stimulate property prices to go higher] |
Agent |
I agree with you sir. These factors are good factors that will bring Singapore economy to the next level in the medium term of 3 to 5 years; and there will be plenty more foreigners of high net worth coming to our country and contribute to our economy. But sir, do you realise that when luxury properties in Singapore are concerned, we are already ranked the 8th most expensive country in the world? Therefore, with every dollar available for investment in this region, a shrewd investor will choose among Shanghai, Mumbai, Ho Chi Min, and even the United States. Interestingly, when the US recovers in 3 to 5 years’ time, it will definitely lure back all the investment monies from this region. |
*TOP – Temporary Occupation Permit issued by the Building Control Authority (BCA). For developer’s projects, once TOP is obtained the buyers will be given vacant possession of the property they had booked earlier. With TOP, the buyers can either live in the apartment or rent it out for income. Investors tend to favour private property with TOP as they can enjoy immediate income from renting the apartment.
Annex B
Besides Bear Stearns, how do the other leading banks fare in the aftermath?
1. Citigroup Inc
Citigroup Inc posted a US$5.11 billion loss, less than analysts' most pessimistic estimates, and said it will cut 9,000 jobs - sending its shares up as much as 7% in New York trading.
It reported almost US$16 billion of write-downs and increased bad loan reserves as customers fell behind on home, car and credit-card payments. Revenue fell 48% to US$13.2 billion
The bank's write-downs and credit losses from the collapse of the sub-prime mortgage market now total almost US$40 billion, more than Zurich-based UBS AG and Merrill Lynch. Results included US$7.6 billion of write-downs and credit costs on mortgages and bonds, US$1.5 billion on leveraged buyout loans and US$1.5 billion on auction-rate securities. The bank wrote down the value of assets it absorbed last year from so-called structured investment vehicles by US$212 million. The company also marked down the value of bond insurance contracts by US$1.5 billion. Citigroup set aside about US$1.8 billion to increase reserves for bad consumer loans.
2. Credit Suisse Group & rival UBS
The Credit Suisse Group, the Swiss banking giant, had to suffer a US$5.3 billion write-down in soured investments. It also reported a net loss of 2.15 billion Swiss francs, or (S$2.84 billion), in the first quarter, compared with net income of 2.8 billion francs a year earlier.
Credit Suisse has written off about US$10 billion of bad investments since the start of 2007, well below that of its larger Swiss rival, UBS, which has reduced its assets by US$38 billion.
Banks around the world have written down nearly US$300 billion on assets since the credit crisis began last summer with the collapse of the sub-prime mortgage market.
3. Merrill Lynch
Merrill Lynch, the world's largest brokerage, would cut 2,900 jobs after more than US$6 billion fresh write-downs pushed it to a loss for the first quarter.
The write-downs caused Merrill Lynch to lose US$2.14 billion compared to a profit of US$2.11 billion a year earlier. Analysts had predicted a loss of US$1.72 billion. Merrill dropped as much as 3.7% in New York trading and its stock has fallen 53% in the past 12 months.
Annex C
The 25 Most Sellable Projects in District 15
No |
Project |
Unit Sold |
Price Range |
Psf Range |
||
1 |
AALTO (New) |
32 |
$2.06m |
$6.2m |
$1,389 |
$2,541 |
2 |
Butterworth 8 |
11 |
$370K |
$1.39m |
$282 |
$990 |
3 |
Casuarina Cove |
10 |
$708K |
$1.6m |
$814 |
$984 |
4 |
Costa Rhu |
41 |
$145K |
$5.5m |
$104 |
$1,269 |
5 |
Cote D'azur |
62 |
$750K |
$2.8m |
$705 |
$1,288 |
6 |
Eastern Lagoon |
13 |
$675K |
$1.2m |
$871 |
$1,088 |
7 |
Fernwood Tower |
13 |
$1.05m |
$2.5m |
$879 |
$1,046 |
8 |
Grand Duchess (New) |
23 |
$970K |
$2.8m |
$536 |
$1,200 |
9 |
Katong Park Tower |
20 |
$1.06m |
$1.87m |
$686 |
$920 |
10 |
Lagoon View |
11 |
$1m |
$1.4m |
$607 |
$850 |
11 |
Laguna Park |
12 |
$1.25m |
$1.65m |
$818 |
$1,046 |
12 |
Legenda |
17 |
$580K |
$1.05m |
$439 |
$697 |
13 |
Mandarin Garden |
82 |
$220K |
$2.78m |
$301 |
$999 |
14 |
Neptune Court |
25 |
$920K |
$1.5m |
$562 |
$992 |
15 |
One Amber(New) |
123 |
$460K |
$3.7m |
$658 |
$1,395 |
16 |
Pebble Bay |
42 |
$1.13m |
$8m |
$829 |
$1,372 |
17 |
Sanctuary Green |
35 |
$266K |
$3.1m |
$339 |
$1,207 |
18 |
The Atria At Meyer |
16 |
$1.3m |
$2.39m |
$1,053 |
$1,561 |
19 |
The Belvedere |
53 |
$729K |
$4.9m |
$676 |
$1,873 |
20 |
The Esta(New) |
63 |
$715K |
$2.2m |
$566 |
$1,224 |
21 |
The Makena |
34 |
$1m |
$2.75m |
$938 |
$1,577 |
22 |
The Sea View (just TOP) |
75 |
$445K |
$4.24m |
$682 |
$1,560 |
23 |
The Waterside |
12 |
$2.6m |
$3.8m |
$1,083 |
$1,583 |
24 |
Villa Marina |
45 |
$690K |
$1.32m |
$519 |
$789 |
25 |
Water Place |
55 |
$200K |
$2.15m |
$156 |
$1,410 |
Buy, Sell, Rent, Invest, In Singapore
Billy Chen
CEA Registration Number : R029372I
Tel: (+65) 88689999
Fax: (+65) 64021826
billy@billychen71.com
KF Property Network Pte Ltd
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