Supply, interest rates frame housing debate

The property market yesterday toasted the sale of a record 5,719 private homes in the third quarter, even though the industry posted a second consecutive month-on-month drop in sales to 1,143 units in September. Despite the high point, the discussion in property circles was marked by circumspection.

The number of homes that developers manage to sell in the fourth quarter as well as next year will be limited by the shrinking stock of launch-ready homes and developers’ fast-depleting landbanks.

While the economic outlook is improving, the accompanying scenario of rising interest rates may cause some to re-evaluate their property investment decisions as mortgage rates rise. If savings rates on bank deposits also increase, this will take some shine off parking money in property, which is what many investors have been doing this year, says DTZ executive director (consulting) Ong Choon Fah.

Urban Redevelopment Authority figures released yesterday showed that developers sold 1,143 private homes (excluding executive condos) in September, down 36.6 per cent from the 1,804 units they sold in August, which in turn was about 35 per cent below the July high of 2,772 units.

The 5,719 units developers sold in Q3 busted the previous record of 5,129 units in Q2 2007. With 12,969 private homes sold in the first nine months of this year, developers will have to sell an average of just 614 units a month from October to December this year to match the full-year record of 14,811 units set in 2007.

The drop in September sales, which was the second consecutive month-on-month decrease, is seen by some property consultants as evidence of price resistance setting in after rapid price hikes in recent months.

Colliers International’s director for research and advisory Tay Huey Ying highlighted an increase in the proportion of transactions at or below $1,000 psf to 54 per cent in September from a 49 per cent share in August. ‘This is a reversal of the downward trend since April 2009,’ she added.

Yet another sign of price-resistance setting in could be the pretty mixed bag of results obtained by analysts who studied URA’s data and compared prices achieved by developers between August and September.

Market watchers say another factor for slower sales last month could be the government’s move on Sept 14 to scrap the interest absorption scheme (IAS), which some blamed for oiling the wheels of property speculation.

Last month’s drop in private housing sales was also supply-led, said Real Estate Developers Association of Singapore CEO Steven Choo. The number of units launched by developers slipped 12.4 per cent from 1,613 units in August to 1,413 units in September.

This drop, however, was much less than the nearly 37 per cent decline in units sold. And that meant the ratio of units sold to units launched fell from 111.8 per cent in August to 80.9 per cent last month – the lowest since February this year – as buyers became more selective, observed DTZ’s South-east Asia research head Chua Chor Hoon.

‘Suburban projects and developments with small units continued to be favoured,’ she added. The Outside Central Region was the only segment which posted an increase in units sold, from 531 in August to 560 in September – against month-on-month decreases of 72 per cent and 40 per cent respectively for the Core Central Region and Rest of Central Region.

September’s top selling projects were Hundred Trees (327 units sold at a median price of $941 psf), followed by The Interlace (243 units transacted at $1,047 psf median price), and Elliot at the East Coast (65 units; $947 psf), CB Richard Ellis noted. Hundred Trees and Interlace made up about half of September’s sales.

Colliers’ analysis showed that whereas the highest price achieved in August was the ‘above $4,000 to $4,500 psf range’ with two transactions, the highest price band in September was the ‘above $3,000 to $3,500 psf range’ with seven units sold.

These comprise six units sold at Seven Palms Sentosa Cove at between $3,091 psf and $3,353 psf and an apartment at Nassim Park Residences that fetched $3,268 psf.

Source : Business Times – 16 Oct 2009

Interest absorption greasing market – selectively

Is the interest absorption scheme (IAS) helping to grease home sales?

The answer seems to be yes, if there is no price premium charged by developers for the IAS. However, if developers charge more in exchange for interest absorption, then the buyers’ profile may decide whether they opt for IAS, industry players say.

Generally, buyers in projects targeted primarily at owner occupiers, such as suburban, mass-market condos prefer to buy on normal progress payment scheme (NPS) rather than IAS, under which they may pay only the initial 20 per cent with no further payments until the project is completed.

For example, slightly over a quarter of those who bought 626 units at Caspian near Jurong Lake since its release in February and 100 units at Waterfront Waves in the Bedok Reservoir area relaunched at lower prices since March have opted for IAS.

At Double Bay Residences in Simei, the proportion of IAS buyers is said to be higher, at 40-50 per cent. At Mi Casa in Choa Chu Kang, no buyer has opted for IAS. Those who bought on IAS in these projects paid 2 or 3 per cent more for their units. The thinking is that mass-market home buyers are usually more price sensitive and prefer NPS if it costs them less, say property pundits.

Projects that have drawn investors may see more buyers inclined to opt for IAS even though there is a price premium. Here, again, the quantum of premium may matter.

For instance, Frasers Centrepoint, which is charging 2 per cent more under IAS for Martin Place Residences, has found that 75 per cent of those who picked up the 80 units in the condo over the weekend opted for IAS. On the other hand, only 5 per cent of buyers of the 109 units that CapitaLand sold since last Friday at The Wharf Residence (nearby) chose IAS. This could be due to the heftier premium of 5 per cent for IAS.

However, some observers suggest another reason: Wharf Residence could have drawn a fair number of short-term investors.

With IAS, buyers have to immediately sign up for a housing loan (even if they don’t need to make a drawdown until much later). And they will have to pay a penalty if they redeem their loan early.

‘So short-term buyers in an investment grade project may prefer to opt for NPS to avoid being tied down to a loan and having to pay a penalty to the bank for early loan repayment,’ explains Knight Frank executive director Peter Ow.

Agreeing, EL Development managing director Lim Yew Soon told BT that feedback from some buyers who chose NPS for its Illuminaire On Devonshire project (despite the group not charging any price premium for IAS) indicates that they did not intend to hold their units till the project was completed.

The penalty for early loan redemption is typically said to about 1.5 per cent of the loan quantum. ‘So it may be a deterrent for smaller speculators,’ as Mr Lim suggests. However, this may not be a serious issue for deep-pocketed investors eyeing bigger gains.

‘Investors are taking advantage of IAS, which is the old DPS (deferred payment scheme) all over again, except that you have to talk to the banks earlier. Essentially IAS, like DPS, provides a financial option on the real estate market. By paying just 20 per cent of the value of the property, you can take a (bet) that property prices will appreciate by when it’s time to pay up,’ said a property analyst.

Under IAS, buyers have to sign up at once for a home loan. This is unlike DPS, where they could wait much later, closer to the project receiving Temporary Occupation Permit, when they have to pay the bulk of the purchase price to the developer.

Still, some like Mr Ow argue that IAS does not encourage speculation. ‘Whether speculation kicks in depends on the stage of the market. In today’s condition, only the very brave will come in to speculate.

‘IAS involves obtaining a bank loan approval upfront and banks are cautious about granting loans to property investors. It is quite unlikely banks will approve mortgages for those buying multiple units in a project.’

Others point out the current buying flurry does not stem from IAS. ‘The buying interest seems spurred by positive sentiments about the market as people are drawn to buy/upgrade due to reasonable prices,’ a spokesman for Far East Organization said.

Source : Business Times – May 2009

Private home sales strong

SALES of new private homes continued to boom in April, almost matching the frenetic pace of activity set in both February and March this year.

Some 1,207 units were sold during the month as more were launched by developers keen to take advantage of increased buying momentum, partly fuelled by stock market rises. This compares with sales of 1,220 units in March and 1,332 in February.

Last month, developers launched 1,083 new homes, up from 832 in March, according to data released yesterday by the Urban Redevelopment Authority.

The latest figures mean that developer sales for the first four months of the year equate to around 88 per cent of all such sales last year. The two best-selling projects in April were Mi Casa in Choa Chu Kang and The Arte in Jalan Datoh. Buyers picked up 115 units of Mi Casa at a median price of $639 per sq ft (psf), while 110 units of The Arte were sold at a median price of $903 psf.

Suburban projects remained the most popular. Some 523 suburban units were sold during the month, down from 559 units in March and 840 in February.

In April, the lowest-priced non-landed deal was in Bayou Residence, where a unit with a rooftop garden was transacted at just $300 psf.

The month saw increased launches and sales activity in the core central region. Some 339 homes were launched there – five times the 70 units in March and the most since September 2007.

Certain prime projects with median prices from $1,156 psf to $1,703 psf were popular with buyers, said CBRE Research. It pointed out that projects such as the sold-out 72-unit Illuminaire On Devonshire, RV Suites and Attitude At Kim Yam were successful because of the low absolute quantum price per unit – they comprised mostly small-format units of 330 sq ft to 720 sq ft.

Ms Jacqueline Wong, head of residential at Jones Lang LaSalle, said: ‘Buying appetite is returning for new developments that are reasonably priced. For example, Verdure by Bukit Sembawang on Holland Road, with a median price of $1,416 psf, roughly translates to below $2 million for a home in Holland Road.’

Said Mr David Neubronner, executive director, residential at Credo Real Estate: ‘The perception of the market is changing. Certain quarters feel that prices may not go down very much from current levels. Some new launches this year started selling at slightly lower prices to soak in demand, but they are now raising their prices by a little.’

Still, some of those who launched earlier at higher prices continue to cut.

Yesterday, CapitaLand released 100 units at the 999-year leasehold The Wharf Residence off Mohamed Sultan Road at $1,300 psf to $1,600 psf. To entice buyers, it is waiving stamp duty and offering interest absorption. Prices are down from a range of $1,429 to $1,708 psf in the third quarter of last year.

CBRE Research executive director Li Hiaw Ho said: ‘Based on the price range of the units sold in April and May, we are seeing a stabilisation of prices in contrast with the 14.1 per cent quarter-on-quarter record decline in the first quarter.’

However, while the mass and mid-markets have found their equilibrium, high-end developers may still have to lower prices if they want to sell now, said Mr Neubronner.

Property experts warned that April’s pace is unlikely to be sustained, given that Singapore remains in a recession.

‘Many homebuyers are purchasing new homes in the hope that the property market would recover shortly,’ said Knight Frank director of research and consultancy Nicholas Mak.

Mr Neubronner added that prices could possibly hover around current levels for the next 12 months.

Dr Chua Yang Liang, head of research, South-east Asia, at Jones Lang LaSalle, added: ‘Until there are clear signals of a stabilisation and underlying positive growth in the real economy, the residual pent-up demand alone cannot be expected to lift the residential market in the long term.’

Source : Straits Times – May 2009

Home sales remain strong

More than 1,000 private homes sold for the second month in a row in March.

THE bumper private property sales recorded in February were no fluke.

For a second straight month, home hunters defied the weakening economy to buy more than 1,000 units last month.

Property consultants say buyers are attracted to what they regard as good buys in the moderately priced mass market.

Still, they warn that these strong buying levels are probably not sustainable.

Last month, property developers sold 1,220 new private homes, just shy of the 1,332 units sold in February.

It was the first time in over a year that the market has seen two consecutive months with more than 1,000 units sold. Sales for both months were a stunning contrast to the dismal 108 in January.

Another striking figure: First-quarter new private home sales hit 2,660 units, representing 62 per cent of all new homes sold during the whole of last year.

February sales – boosted mainly by two new launches Alexis and Caspian – were the highest since August 2007.

Figures compiled by the Urban Redevelopment Authority also showed 832 new housing units were launched last month, compared with 1,072 units in February and just 204 units in January.

Most units sold last month were in the mass market, along with a few city-fringe small-format apartments at condominiums such as Domus and The Mercury.

HDB upgraders were the hottest group of buyers. CBRE Research said that last month alone, they bought 550 to 600 units at mass market projects such as Caspian, Double Bay Residences, Kovan Residences, Livia, Mi Casa and The Quartz at median prices of $610 per sq ft (psf) to $740 psf.

A survey of first-quarter caveats lodged for this market segment indicated an average price of $695,000, said CBRE Research executive director Li Hiaw Ho. ‘This is probably a good time for HDB home owners to upgrade to private property as the price gap between private properties and HDB resale flats has narrowed.’

Said Colliers International director for research and advisory Tay Huey Ying: ‘Developers have lowered their price expectations for new launches and generally cut prices of unsold units. Buyers are biting as there is pent-up demand.’

The top three sellers in March were Double Bay Residences, Mi Casa and The Arte. About 85 per cent of units sold last month were priced below $1,000 psf, said PropNex chief executive Mohd Ismail.

The high-end showed some life with 70 units launched and some sales, including one Orchard Scotts unit at $2,220 psf.

But overall, only 100 prime units were launched in the first quarter, or just 4.7 per cent of all units launched, well down from the 39.4 per cent of all units launched in the fourth quarter last year.

Knight Frank director of research and consultancy Nicholas Mak said this was partly due to the retreat of foreigners from the luxury market.

Preliminary data suggests foreign deals stood at 16.8 per cent in the first quarter – a level last seen when Sars badly hit the market in 2003, he said.

Market analysts say it is a good start to the year, but they do not expect the strong buying to continue long-term.

‘In the short term, this rate of buying can continue provided developers lower or maintain their prices,’ Chesterton Suntec International’s research and consultancy head Colin Tan said of March sales.

But in the long term, it is not sustainable, he said. ‘The last time the market sold so many new units (14,811 units) was in 2007. That was when the deferred payment scheme was available. And it has since caused indigestion in the top end of the market.’

Unless the Singapore economy and employment market improve significantly this year, only 6,000 to 7,000 new private homes are expected to be sold, said Mr Mak.

He said healthy demand for mass market homes is likely to continue only as long as average HDB resale prices do not fall by more than 7 per cent year on year.

‘Many in the mass market segment are buying now and banking on their future earnings to service their loans as they are afraid of missing the boat,’ said Mr Mak

 The Straits Times  April 16 2009

Property valuers feel the buzz

Recent strong home sales, refinancings help boost demand.

Away from the glare of the market, valuations departments of property consultancy groups here have been quietly doing brisk business despite the property slump.

Valuers attribute this in part to a pick-up in sales at private residential property launches since February. Also contributing to demand are buyers who are getting loans for units bought earlier on Deferred Payment Schemes (DPS), and borrowers who are seeking better refinancing packages and switching banks.

Some property consultants say banks are requesting more frequent valuations of properties in their loans portfolio, given declining property values. ‘It’s not just for housing loans, but offices, factories, etc. I suppose banks have to monitor if the properties are in negative equity,’ says DTZ Southeast Asia’s CEO Ho Tian Lam.

Said Joseph Wong, OCBC Bank’s group chief credit officer (consumer credit risk), group risk management: ‘We conduct regular reviews on our loan portfolio which cover various factors including update of valuation of properties.’

Mr Ho said the volume of valuations at DTZ has risen more than 10 per cent in the past one or two months compared with the same year- ago period. The firm has redeployed two senior marketing executives from its investment sales department to its valuations department.

Knight Frank managing director Tan Tiong Cheng told BT the number of valuation instructions for private residential properties clinched by his firm has increased 36 per cent in Q1 this year compared with the preceding quarter. For March alone, the figure has gone up 59 per cent from the preceding month. These instructions, which are requested either by lending banks or borrowers, refer to paid valuations and not indicative ones, which are often provided to banks for free or for a token sum.

Jones Lang LaSalle’s head of valuation advisory services Tan Keng Chiam said his firm has seen a 10-20 per cent rise in the number of weekly valuation enquiries since late March compared with the January-February period. ‘But this has not translated to huge volumes of business,’ he added.

Mr Tan said there have been ‘more enquiries for refinancing purposes as well as a noticeable, though slight, increase related to home purchases’.

Despite higher business volumes, none of the firms, citing competition, has any plans to raise its valuation fees, which can be as little as $300 to $500 for valuing small apartments. Commercial buildings cost several thousands to tens of thousands of dollars to value, depending on the size and complexity of the valuation required, which also depends on the lender’s profile. Package fees for valuing an entire portfolio of buildings for a property group or real estate investment trust (Reit) can run into hundreds of thousands of dollars.

‘For Reits, in particular, valuations are a lot more meticulous. We have to go through individual tenancies and do more checks in general. And we don’t just use the comparables method but also discounted cashflow to arrive at the property valuations,’ Knight Frank’s Mr Tan said.

Most valuers BT spoke to say a key reason they have been kept busier lately is the gush of private residential property launches of affordably priced mass- market and small-sized apartments. With fewer launches these days offering DPS, buyers have to sign up for a housing loan soon after their purchase – whether they are opting for interest absorption or taking a normal progress payment scheme.

For projects sold earlier on DPS that are nearing completion (when DPS expires), buyers need to get their home loans in place, and this has also led to more valuations required, explains Mr Tan of Knight Frank.

In addition, the increase in primary market home sales by developers has spilled over into the secondary market, and this has been another source of higher demand for valuations.

The head of another property consulting group told BT that some real estate funds have been asking for monthly valuations of their property portfolio to ‘track the market more closely instead of relying just on annual valuations’.

DTZ’s Mr Ho says Reits seeking refinancing have also contributed to an increase in valuation requests at the firm.

Valuers note that besides Reits, other property owners who have opted to refinance mortgages – for their homes, for instance – because of more attractive packages offered by rival banks have also raised demand for valuation services.

DTZ’s Mr Ho said that the firm’s professional services – which besides valuation include research and consultancy, property management and project/ facilities management – account for about 30-40 per cent of revenue in normal times, with agency activities like property sales, leasing and investment sales taking the lead.

The Business Times , April  2009

Investors pick up higher-end condos ..

Value buys in prime areas available even though property market still weak.

SOME high-end condominiums recorded sparkling weekend sales even though the overall property market was generally quiet in terms of new launches.

Of the two new previews, Illuminaire on Devonshire sold out its 72 units at $1,630 to $1,730 per sq ft (psf), while Verdure in Holland Road sold 14 units of 34 launched units at $1,400 psf.

The 12-year-old Gallop Gables saw far stronger than expected demand, with investors picking up 28 units, even though they are about $3 million or more each.

Previously, the new projects that have attracted fairly strong interest, given today’s climate, were not in such prime areas. But some investors may be looking around now that the market has fallen quite a bit.

Mr Peter Ow of Knight Frank, which is marketing Verdure and Gallop Gables, said the response at these two sales showed individual investors are back.

‘These buyers are savvy investors who are already staying in prime areas,’ he said. ‘Generally, the property market is still weak, but there are value buys around. And people are beginning to see value in well-located projects.’

Of 14 Verdure units that Bukit Sembawang has sold during the preview, a few are penthouses. While the overall project is priced at $1,350 psf on average, the 14 were sold at an average of $1,400 psf, or from $1.5 million to $2.8 million.

A scheme offering interest absorption was available without any extra charge. The project, which has 68 units, will be launched this weekend.

Over at Gallop Gables near Botanic Gardens, Straits Trading sold 26 units – 16 more than its target. It had offered only 10 units with a guaranteed rental yield of 7 per cent for two years. The rest were purchased without the 7 per cent guarantee, but mostly with existing tenancies offering a rental yield of 3 to 5 per cent.

The buyers paid between $3,075,200 and $3,840,000, or an average price of $1,220 psf for the units, which averaged about 2,800 sq ft.

The buyers were mainly residents ranging in age from the mid-30s to the late 70s who bought for investment purposes, said Straits Trading, which had earlier said the sales would generate cash to allow it to invest in distressed assets.

A few buyers, it added, said they may live in the apartments after the end of the two-year rental guarantee period.

At Illuminaire, the affordable price drew both investors and speculators, industry experts said. As it has only one- and two-bedroom units, ranging in size from just 441 sq ft to 721 sq ft, the total price was kept low – from $749,000 to $1.21 million.

EL Development managing director Lim Yew Soon said he had changed the design of the project from a 36-unit development to a 72-unit one last September. By then, a three-bedroom showflat had already been completed – and had to be reconfigured into a smaller unit.

‘I realised the market would prefer small units,’ he said.

Mr Lim, who bought one unit for himself and kept two for business associates, said most buyers were keen on the interest absorption scheme, which was offered at no additional cost.

Some buyers also liked the unusual automated car parking system. There are two car lifts that will store cars in an adjoining multi-storey carpark block.

 
The Straits Times,  April 2009

Home sales surge on new launches

Analysts ask if February spike from new heartland condos can be repeated

SALES of new private homes surged dramatically last month to the sort of levels seen in the property boom.

All 293 units at Alexis in Alexandra Road (left) were sold at a median price of $1,083 per sq ft (psf). — PHOTO: THE BUSINESS TIMES

However, some property analysts cautioned that the spike in sales to 1,323 units in February may have been a blip – attributable largely to two popular launches of mid-priced heartland condos.

Still, the new Urban Redevelopment Authority (URA) figures showed that last month’s bumper sales were equal to more than a quarter of all the sales of new private homes last year – 4,264 units.

The February figure is also a huge jump from the dismal 108 unit sales in January as buyers stayed away amid deepening economic gloom and Chinese New Year festivities.

‘It has been more than one year since we last saw total transactions surpassing the 1,000 mark,’ said Jones Lang LaSalle’s local director and head of research, South-east Asia, Dr Chua Yang Liang.

The launch of new units was also up sharply last month, to 1,069 units from just 204 units in January.

Analysts say two newly-launched heartland condos, Alexis and Caspian, proved especially popular with upgraders who had been biding their time amid the sharp run-up in prices during the boom.

All 293 units at Alexis in Alexandra Road were sold at a median price of $1,083 per sq ft (psf) while Caspian in Jurong sold 517 units at a median price of $603 psf. Prices started from $450,000 at Alexis and $340,000 at Caspian.

A third project, originally launched in 2006, The Quartz in Buangkok Drive, sold 168 units last month at a median price of $591 psf after it was relaunched at a lower price. The 99-year leasehold condo was first released at $490 psf on average, which rose to $650 psf in 2007.

Apart from these three, no other project had notable sales. Livia in Pasir Ris launched another 80 units last month, selling just 16 at a median price of $620 psf. A new launch, The Beverly in Toh Tuck Road, offered 31 units last month but sold none. It sold a few this month.

For a second straight month, no units were sold at the decidedly upmarket price range of $2,500 psf to $3,999 psf, said Knight Frank’s director of research and consultancy, Mr Nicholas Mak.

CBRE Research executive director Li Hiaw Ho said the top three sellers were projects in the heartland, where a majority of the buyers are HDB upgraders.

They have been waiting on the sidelines during the run-up of home prices in 2006-2007, when there was a lack of mass-market projects for sale, he said.

Apart from pent-up demand, consultants said sales at Caspian and Alexis were driven by the availability of small, affordable units – mainly under $800,000.

Private home sales for the January to March quarter could be about 1,800 to 2,000 units, according to Mr Li, going by the ‘brisk sales’ at Double Bay Residences, Suites @ Kembangan and others so far this month. The 646-unit Double Bay in Simei has, for instance, already posted sales of at least 210 units at $600 psf to $650 psf since its March 6 preview.

Source : Straits Times -  Mar 2009

Home owners trade up in style

Owner-occupiers of older condominiums and HDB properties are capitalising on affordable pricing to upgrade to new and larger apartments

THE BEST TIME to buy property, says K S Quek, a 45-year-old businessman who runs an electronic equipment servicing company with his wife, “is during a downturn”. The Queks did just that in the last property slump when they bought their current home, a fourth-floor 1,238 sq ft apartment in Savannah CondoPark at Simei Rise in 2003 for just under $600,000. The 648-unit condominium, developed by City Developments Ltd (CDL), was completed in 2005 and is notable for its landscaped gardens, pools and large bronze animal sculptures.

At that time, Singapore was in recession, just as it is now. This time round, the affordable pricing of recently launched 99-year leasehold condos in the suburbs have also presented the Queks with an opportunity to upgrade from their existing condo to a larger, newer apartment. After checking out recent launches, such as the 724-unit Livia condo in Pasir Ris by CDL and the 712-unit The Caspian in Jurong by Frasers Centrepoint, the Queks homed in on an apartment at Double Bay Residences, a 646-unit, 99-year leasehold condo in Simei by developer UOL Group and its privately held sister company Kheng Leong in a 60:40 joint venture.

Image:‘We had done our homework and we were very certain which unit we wanted,’ says Quek of his family’s purchase of a ground-floor four-bedroom, 2,379 sq ft apartment at Double Bay Residences for $1.1 million.

The Queks were one of the first to show up at the preview on March 6. “We had done our homework and we were very certain which unit we wanted,” says Quek. The chosen apartment was a $1.1-million four-bedroom, 2,379 sq ft apartment on the ground floor that comes with a water feature. Having lived in a highrise apartment, Quek looks forward to tending a little garden in his 890 Owner-occupiers of older condominiums and HDB properties are capitalising on affordable pricing to upgrade to new and larger apartments sq ft private enclosed space that was one of the draws of the unit. With three young children aged seven, five and 2½, Quek admits that the lifestyle aspect was one of the key considerations for the purchase.

Quek says the primary consideration was the location — the project’s proximity to the Simei MRT station (but yet not close enough that the noise level will become an issue) and to the Eastpoint Mall.

In terms of layout, “most new condos these days look pretty similar”, admits Quek, but he was sold on the particular unit at Double Bay Residences because of the landed feel of the ground floor apartment and the size of the unit, something that a higher-floor apartment would not offer. “There were only two four-bedroom apartments on the ground floor with these large balconies,” says Quek.

He adds that it’s too early to say whether he will sell his existing condo or lease it out. After all, he has three years to decide as Double Bay Residences is expected to be completed only in 2013. Quek also took up the interest absorption scheme that UOL has tied up with UOB Bank to offer homebuyers of Double Bay Residences. This means that after paying the initial 20% deposit, Quek does not need to pay anything until the Temporary Occupation Permit for the project is obtained, and that is when he needs to start servicing the loan.

About 40% of the buyers at the preview came from Simei, with a huge number also from the other estates in the east, such as Tampines, Bedok and Pasir Ris. Only 12% of the buyers were not current residents in the nearby areas, says Liam Wee Sin, chief operating officer of UOL Group.“There’s a pool of latent demand from [owners of] the older condos in the vicinity. And, having stayed in their condos for 10 years, they want to move to a newer condo.”

Double Bay Residences will therefore set a new benchmark in terms of product and pricing, notes Doris Ong, vice-president of project marketing at ERA Network, joint marketing agents with Knight Frank for the project.

The main attraction is that Double Bay Residences is the newest development in Simei Street 4, where the last launch was over a decade ago, says Liam. Next door is Simei Green, a 602-unit executive condo developed by NTUC Choice Homes and completed in 1999, while behind it is Tropical Spring, a 242-unit condo also developed by NTUC Choice Homes, which was completed in 2002/03. Modena, a 230-unit condo, also of the 99-year leasehold variety in Simei Street 4, was developed by OUB Centre Ltd and completed in 2001/02.

The most popular units in Double Bay Residences have been the 2+study bedroom apartments of 1,001 to 1,765 sq ft. Those were sold at prices ranging from $600,000 to $720,000, says UOL.

However, beyond the affordability factor influencing property purchases is one of aspiration, notes Liam, as it was the higher-floor units, and even the penthouses, that were taken up faster than the lower-floor units. In the lower-floor apartments, the large units were snapped up first.

Of a total 10 penthouses in the development, ranging from 3,000 to 3,500 sq ft, three have been snapped up at prices ranging from $1.7 million to $1.9 million. There are 44 groundfloor units with a mix of one- to fourbedroom apartments — 17 were sold during the preview at prices ranging from $660,000 to $1.2 million.

INVESTOR APPEAL: CHANGI BUSINESS PARK, THE FOURTH UNIVERSITY

Seventy percent of the buyers at Double Bay Residences during the preview were owner-occupiers, with investors making up the balance, observes ERA’s Ong. They are banking on its proximity to Changi Business Park, where banks like Citibank, DBS and Standard Chartered will be relocating their back office and global support services functions to built-to-suit, multimillion-dollar complexes sometime this year and the next, to make renting out their apartments an attractive investment proposition.

Adding to the appeal of Changi Business Park is the mixed-use project won by developer Frasers Centrepoint in a joint venture with JTC Corp’s wholly owned subsidiary, Ascendas Land. The mixed-use development will contain not just business space, but also a retail mall and a 300-room hotel that’s likely to be completed by 2013.

A further attraction in the area is the fourth university coming up near Changi Business Park on the land previously allocated for the University of New South Wales’ Singapore campus. The university is expected to open by 2015.

Rental rates in Simei seem to be holding up. HDB four-room flats in the area are being rented out at $1,700 to $1,800 per month, while five-room flats are fetching $1,800 to $2,000 per month, notes Ong. As for private condos in the neighbourhood, three-bedroom apartments in the likes of Simei Green and Eastpoint Green have a going rental rate of $2,900 to $3,200 per month.

Assuming a rental rate of $3,000 a month for three-bedroom apartments today, this means investors in Double Bay Residences can expect rental yields of 4% to 5%. “This yield is achieved at a time when the [Changi Business Park] is not even fully developed and the fourth university is not even up yet,” comments Peter Ow, executive director of residential marketing with Knight Frank.

CAPITALISING ON INDOOR-OUTDOOR LIVING

In the past, buyers often perceived that large private enclosed spaces or generous sized balconies and patios ate into built-up areas, resulting in smaller living rooms and tiny bedrooms, for instance.

That’s a popular misconception, says Ow. “For all condo developments, the built-up area for, say, a three- or a four-bedroom is pretty similar either on the ground or higher floors. The difference is that on the ground floor, you have the benefit of having a larger balcony garden or patio. And, increasingly, there are people who want that larger space to enjoy the indoor-outdoor lifestyle.”

Double Bay Residences is regarded as one of the new mass-market condos that provide such generous private enclosed space (PES), with timber deck and water features for the three- and four-bedroom groundfloor apartments, according to Chang Huaiyan, founder of landscape architectural firm Salad Dressing and the landscape architect for Double Bay Residences. “It will bring the concept of indoor-outdoor living to new heights,” he adds. “It will add a new dimension to one’s apartment and act as an extension of the living room.”

Budgets for landscaping a balcony garden vary from $1,000 for those who just want potted plants and flowers, to $4,500 for those looking at installing a koi pond and other features, estimates Chang. “A lot will also depend on the kind of outdoor furniture and accessories that the owner chooses,” he adds.

The duplex apartments at Double Bay Residences have generous PES that comes with a swimming pool and timber deck, while the roof terraces of penthouses comes with a Jacuzzi and trellis, says Chang.

For penthouses, owners can spend anywhere from $15,000 to $100,000 on their roof terraces, says Ow. Some have turned their rooftop terraces into places for entertaining friends and family, and have fitted them out with an outdoor kitchen, complete with professional grill, stove, fridge and sink. Still others have turned them into private sanctuaries with plants, flowers and herbs and water feature.

MID-TIER CONDOS WITH LIFESTYLE APPEAL

This is not Chang’s first collaboration with UOL or Kheng Leong. He is also the landscape architect for UOL’s other condo projects such as Meadows@Peirce on Upper Thomson Road, located on the former Green Meadows site and near Peirce Reservoir.

Meadows@Peirce is likely to be launched in 2Q or 3Q2009, says UOL Group’s Liam. While the low-rise maisonettes have been torn down, the high-rise tower has been retained and will be reconfigured. This is to free up a large area for amenities and also landscaping. All Liam would say is that it would be a “very naturedriven project”. “The Green Meadows [site] is also a unique location in the Upper Thomson area,” he says. “It’s also set in the midst of a private landed housing estate.”

Chang’s Salad Dressing is also the landscape architect for Kheng Leong’s condo, Domain 21 on Delta Road, which was completed last year, and Oasis Garden, Kheng Leong’s new launch in the East Coast. Liam says the lifestyle factor at Double Bay Residences in Simei is similar to that of One-North Residences and Southbank (the former Eng Cheong Tower) at North Bridge Road.

One-North Residences is located off North Buona Vista Road, is across the street from Nepal Park and next to One North Park. It will be completed later this year. To Liam, Double Bay Residences is similar to One-North Residences in terms of location. Double Bay Residences is near Changi Business Park and the fourth university, while One-North Residences is within one-north, home of the Biopolis bio-medical cluster and research as well as Fusionopolis, the infocomm cluster.

As for Southbank, its location right next to Crawford Bridge and fronting Rochor Canal and Kallang River is the draw. The condo will be completed this year. The Kallang River also provides the backdrop for cyclists and those who want the waterfront lifestyle, notes Liam.

For homebuyers at Double Bay Residences, apart from relaxing on a daybed and enjoying a nice Cuban cigar in one’s own private garden, one can always climb on a bike and cycle through the park connectors in the east coast on weekends, says Liam.

Source : The Edge – Mar 2009

Sale of private homes to foreigners slips to 24%

As foreigners retreated from the Singapore property market in the face of the global financial meltdown, their share of private home purchases eased to 24 per cent last year from the high of 26 per cent in 2007, according to DTZ’s latest analysis of caveats.

Conversely, Singaporeans’ share of the private home buying pie rose from 67 per cent in 2007 to 73 per cent in 2008, with companies making up the rest of the buying pool.

Giving a breakdown of the foreign buying pool, which includes permanent residents (PRs), DTZ said that non-PR foreigners accounted for 11 per cent of total caveats lodged for private homes last year, down from a 13 per cent share in 2007.

Singapore PRs’ share held steady at 13 per cent, supported by the increase in the number of PRs in recent years.

Projects that drew the most Singapore PR buyers last year were chiefly in the mass-market segment such as Melville Park in Simei, Livia in Pasir Ris, The Lakeshore in Jurong Lake District and Clover by the Park in Bishan.

The most popular projects among non-PR foreigners were The Lakeshore, Citylights, Icon.

Districts 9, 10, 15 and 16 were the most sought-after haunts of foreigners (including PRs) who bought private residential properties in Singapore last year. Districts 15 and 16 cover the East Coast area.

Malaysians pipped Indonesians to account for the lion’s share, or 20 per cent of foreign buyers of private homes in 2008, followed by Indonesians (19 per cent), Indians (12 per cent) and mainland Chinese (11 per cent).

DTZ noted that in the fourth quarter of 2008, homes priced above $1 million accounted for 72 per cent of purchases by Indonesians, higher than a 41 per cent share of purchases by Malaysians.

The property consultancy firm’s senior director (research) Chua Chor Hoon reckons that the proportion of foreign buying will stay low in the next 12 months as Singapore property loses some of its relative shine.

‘Steeper currency declines in markets like Australia and UK have made property prices there look more attractive in comparison with Singapore. And investors will become more cautious as the global financial crisis deepens,’ she said.

DTZ’s analysis of caveats captured by the Urban Redevelopment Authority’s Realis system also showed that the number of private home buyers who had HDB addresses fell in Q4 and the whole of 2008.

However the pace of decline was even faster among those with private addresses. As a result, HDB upgraders’ contribution to private home purchases increased from 22 per cent in 2007 to 36 per cent in 2008 – the highest level in four years.

‘In 2008, few investors and speculators, in particular those with private addresses, entered the market and launches of high-end projects were held back.

‘On the other hand, there was a wider spread of projects in the suburbs launched at $1 million or below per unit, which are more affordable for HDB upgraders,’ said Ms Chua.

In general, private homes in districts 15, 18 and 19 were most popular among HDB upgraders.

Projects with the highest number of developer sales to HDB upgraders in 2008 included Livia and Clover by the Park, while in the secondary market, the top-sellers to HDB upgraders were The Centris in Jurong West, Melville Park and Citylights.

Ms Chua reckons that HDB upgraders will continue to feature prominently in the private home buying pie going ahead. ‘The focus this year will be on buying for own occupation rather than for investment or speculation; most HDB dwellers would fit the bill,’ she said.

Source : Business Times – Mar 2009

Fairly brisk sales for new condos

THE show-flat crowd – that rarest of species these days – has been lured back into the market by two new developments that held soft launches this week.

Hundreds of people turned up at the Double Bay Residences showroom in Simei when its doors opened for a private preview yesterday.

Crowds at the Double Bay Residences showroom in Simei yesterday. UOL Group has so far released 250 of the condo’s 646 units for sale. Developers are seeing a renewed interest in their entry-level and mid-priced projects from HDB upgraders and private home owners. — ST PHOTO: AZIZ HUSSIN

Developer UOL Group said more than 80 units have been sold so far, at an average price of $600 per sq ft (psf) to $650 psf. The development’s six retail units have all been sold as well.

Chief operating officer Liam Wee Sin noted that the response was strong ahead of the 99-year leasehold condominium’s official launch next weekend.

UOL has so far released 250 of the 646 units in Double Bay for sale. One-bedroom units in the Simei Street 4 project start from $420,000, while four-bedders cost at least $930,000.

The crowds were also out for The Mercury in Shanghai Road, which was said to be more than 60 per cent sold since it started previews on Thursday.

The 67-unit freehold project is priced from about $1,040 psf. One-bedroom units at the River Valley estate start from $740,000, while two-bedders are going for about $1.1 million.

The fairly brisk sales for these projects come on the heels of a few successful launches recently, which appear to have boosted sentiment in the badly battered property market.

Last month, Frasers Centrepoint said it sold over 300 units in three days at its Caspian condominium in Jurong. To date, over 500 of the 712 units have been sold.

Caspian’s success was mirrored at The Alexis in Alexandra Road, which sold out within a few days of its preview.

Property consultants say the main draw for these projects is their attractive prices, which, at well under $1 million, are affordable for HDB upgraders. Even mid-tier projects such as The Alexis and The Mercury feature smaller units to offset their higher per square foot prices.

‘These days, it looks like the total quantum of price is more important than the price per square foot,’ said Knight Frank director of research and consultancy Nicholas Mak. ‘In some areas, prices have come down 20 per cent to 30 per cent from the peak, and there are probably people who see these buys as good bargains.’

Still, most of the sales activity are confined to the entry-level and mid-priced market. High-end projects are still facing a very challenging time, consultants say.

And while transactions are being steadily chalked up, there remain clear signs that not everything is fine and dandy in this economic recession.

At The Mercury, for instance, agents marketing the project said they had expected it to be fully sold within one day.

In Toh Tuck Road, off Upper Bukit Timah, boutique developer Hiap Hoe was said to have sold only a handful of units in The Beverly condominium, although news reports said more than 300 people turned up for its launch last weekend.

Hiap Hoe released 31 of the 118 units at an average price of $750 psf. The apartments are a bit bigger than average, starting from 1,120 sq ft for the smallest two-bedroom units, which translates into somewhat higher prices per unit.

The developer is also not offering the interest absorption scheme for The Beverly, which was on offer for the Caspian and The Alexis and is available for Double Bay and The Mercury.

Under the scheme, buyers who take out a loan immediately on purchase pay only a down payment and defer remaining instalments until the project is finished.

Mr Liam of UOL, however, said more of Double Bay’s buyers opted for the normal payment schemes rather than taking up interest absorption.

The buyers so far have been a mixed bag – HDB upgraders, private home owners and owner-occupiers, and investors.

On the whole, the smaller units have proven more popular, he said, underscoring the importance of affordability. But he said an ‘encouraging’ sign was that buyers were also going for units on higher floors, which are more expensive.

‘We are seeing a flight to quality,’ he told The Straits Times. ‘If the price is within their budget, they will gun for the better units and the higher floors.’

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HUNT FOR BARGAINS  

‘In some areas, prices have come down 20 per cent to 30 per cent from the peak, and there are probably people who see these buys as good bargains.’ – Mr Nicholas Mak, Knight Frank’s director of research and consultancy

Source : Straits Times – Mar 2009