Developer KOP sails into yacht business

PROPERTY developer KOP Group is moving into the yacht business with the launch of a $48 million joint venture that is poised to sell and manage luxury cruisers.

The new business, Princess Yachts Asia, has secured the exclusive distribution rights for British luxury yacht brand Princess Yachts in Singapore and most of China.

KOP and its partner, China conglomerate Reignwood Group, whose businesses include property development, are investing the money over the next 12 months. KOP holds a 40 per cent stake, and Reignwood 60 per cent.

Initially, the business is offering four Princess yachts in Singapore for sale or lease.

KOP has set up yacht management service company Aqua Voyage to work alongside Princess Yachts Asia and offer private cruises to destinations across Asia. It will also help yacht owners lease out their boats on the charter market.

KOP’s chief executive officer, Ms Ong Chih Ching, said yesterday that the group’s foray into the leisure marine sector was based on what it saw as the huge growth potential in Singapore.

‘As Singapore’s status as a luxury lifestyle destination grows… we believe there’s an opportunity for us to elevate Singapore as a global leisure boat and luxury lifestyle hub,’ she said.

The number of marinas in Singapore has grown steadily over the years and now includes the Marina at Keppel Bay, One Degree 15 Marina Club on Sentosa island, the Republic of Singapore Yacht Club on the West Coast and Raffles Marina at Tuas.

KOP group is majority-owned by the Dubai Group and known for innovative residential projects in Singapore, such as the luxury Hamilton Scotts high-rise condominium that features special elevators that carry cars up to the residential units.

The group is currently looking for opportunities to enter Singapore’s mid-market residential segment in city-fringe areas, said Ms Ong. It has set aside some $350 million for international business opportunities in the next 12 to 18 months.

KOP is also in talks with local travel agencies to begin offering customised cruises to destinations in Asia.

Reignwood Group chairman Chanchai Ruayrungruang said: ‘We are confident that this venture will be successful in meeting considerable pent-up demand for the nautical lifestyle here.’

Ms Ong added: ‘We have got a very positive response so far. We believe that yachts will become a mainstream experience in Singapore soon.

Source : Straits Times – 29 Sep 2009

The new design ascetic

Pared down, simplified and minimal, architects are all reassessing what is really essential in life WHETHER it is because of the constant talk about the economy, wealth destruction or the periodic stockmarket jitters, homeowners appear to have lost the desire to build ever bigger and flashier homes.

Instead, the prevailing design aesthetic seems to be more about ascetism, as more people decide that living in excess is just so last century. Pared down, simplified and minimal, architects are all reassessing what is really essential in life.

Daniel Libeskind, who designed Reflections at Keppel Bay, has perhaps gone a step further by designing a prototype of a house that is prefabricated and can be shipped anywhere in the world. He describes the house as ‘a limited artistic edition of a new space, of a new way of living, a total work of art’.

Called the Libeskind Villa, the four-bedroom house is a composition of three simple interlocking volumes that generate a myriad of geometric spaces. And in keeping with volatile oil prices, it offers maximum insulation and durability, cutting-edge technologies and compliance with some of the toughest energy-saving standards across the world. In designing Libeskind Villa, Mr Libeskind reduces the essence of a home to only the most critical elements and the design just stops short of being austere. And there is no shame in austerity, especially today.

Architect Gwen Tan of Formwerkz has even chosen to celebrate it. Describing a house she is designing for a client, she said that one of the biggest constraints was that the site was so tight it could only accommodate a very small house. Fortunately, her client’s needs were simple and Ms Tan decided that this should be ‘celebrated’. Eventually, the design of the house evolved such that the architectural forms were reduced to a simple building block or as described by Ms Tan: ‘A very basic house form that any three-year-old child could draw.’ But the size (and shape) of the house is not a reflection of the spatial quality which is ‘very intimate’. To ensure there is no excess, Ms Tan needs to understand her client very well. ‘Architecture is livable art. The client’s lifestyle becomes a medium that you paint with and because it’s something that the client can associate with, there’s added meaning and dimension to the product,’ she says.

When the design was finished, the client was instinctively drawn to it. ‘I think sometimes the most simple idea can be the most powerful and effective,’ says Ms Tan. Simple ideas can also be cheaper, which helps, because for whatever reason, fewer people will be wanting to pay for gold taps and Italian marble these days.

Mink Tan of Mink Architects says that he has noticed that some of his clients have asked for less expensive materials, simpler details and cheaper construction methods. Of course, it would be false economy to spend millions of dollars on the land and then penny-pinch when it comes to building the house. So one strategy is to use expensive materials where they matter. Mr Tan describes his approach to design simply as having an ‘Asian soul wrapped in a modern skin’. One of the houses he is currently working on is essentially a series of glass pavilions wrapped by continuous folding walls and floors to form one contiguous volume.

The glass box is about as simple as you can get if you want to create a space but Mr Tan wraps his in a layer of titanium, ‘to signify what I feel is quintessentially Singaporean – an Asian soul clothed in something modern and contemporary’. It is this pragmatic approach to architecture that is also fast emerging as a ‘Singapore style’. Mr Tan describes this style as centred around the modernist ‘glass box’ but with a more highly developed sense of ‘tactility’. Perhaps a concern some homeowners will have is that if design is reduced to too simplistic forms, everything might start looking the same, or worse, quickly go out of style.

To this, Aamer Taher of Aamer Architects says: ‘I think cutting edge designs may get dated but never go out of style – if by dated, one means old.’ For example, he notes that while the architecture of 1960s Brazilian architect Oscar Niemeyer belongs to the now defunct futurist school of architecture, it ’still looks beautiful today’. It is nevertheless difficult to say, without hindsight, what is good or bad architecture. But recalling the 1970s and 1980s, it is probably quite safe to say that architecture of excess is never a good thing.

Many will know of at least one example of the ‘wedding cake’ houses of that era – ‘Those poor copies of western classical architecture that symbolised wealth’ – and beloved by business tycoons, muses Mr Taher. Today, as he wryly points out, these have very much fallen out of fashion. So it’s probably a good thing that clients are a bit more budget conscious these days. It should, however, be said that while the budget may affect the look of a house, the approach to design does not change. ‘Since I like to incorporate some sculptural forms in my work and treat each as a work of art, it wouldn’t necessarily be any different if I had designed it 10 years ago,’ he says. Timeless architecture of today may lack some of the cultural cues that reflect wealth and prosperity but it is no less rich in symbolism.

Claudio Silvestrin, who has designed 18 villas for developer YTL Corp at Sentosa Cove, believes that architecture is akin to ‘composing poetry on earth in partnership with the earth . . .’. Mr Silvestrin is known for designing Giorgio Armani stores and his designs are not cheap. Yet the Sentosa Cove villas look almost uncompleted in their simplicity.

‘The project is about a vision and about architecture to be appreciated as architecture in its purest form,’ says Kemmy Tan, director of international real estate, YTL Singapore. Ms Tan explains that Mr Silvestrin’s architecture ‘explores the innate nature of place rather than the visual excitement of superficial building form’.

So, are home buyers sold on this new age architecture? Well, at Sentosa Cove anyway, more than half of Mr Silvestrin’s 18 villas have been sold so some people certainly are. What is clear, though, is that the best architecture of today is transcending the physical realm of nuts and bolts. And if there is one thing the global recession has taught us, it is that just as money cannot buy happiness (ahem . . . Mr Madoff?), a house needs only to define the space in which you live. How you choose to live your life is another matter.

Source : Business Times – 24 Sep 2009

Property sales test price ceiling

 

Buyers have been flocking to private apartments priced below $800,000 in recent months. Some may fork out a bit more, but with the economy still in the doldrums, most start getting cold feet when prices reach $1 million to $1.5 million.

According to property consultancy DTZ, units selling for $600,000-plus to $800,000 were the most popular from January to April. In DTZ’s analysis of 4,401 caveats captured by the Urban Redevelopment Authority’s Realis system, 1,515 or 34 per cent were lodged for apartments in this price range.

Of these 1,515 caveats, 92 per cent were for units outside prime districts 1, 4, 9, 10 and 11. And 93 per cent were for units of less than 1,400 sq ft.

Projects where plenty of recently released units were in the sweet price range include Double Bay Residences in Simei, MiCasa in Choa Chu Kang and Waterfront Waves in the Bedok Reservoir area, DTZ said.

For instance, 95 of 171 caveats lodged for Double Bay Residences (56 per cent) involved units priced from $600,000-plus to $800,000.

Savills (Singapore) has reached a similar conclusion from its own study of caveats – units below $800,000 have been most popular in the outside central and rest of central regions.

Even in the core central region, it has been possible to find smaller units for less than $800,000 – and buyers favour them. At The Mercury near River Valley, for instance, 27 of 38 caveats lodged (71 per cent) were for units priced below this level.

Anecdotally, buyers at recent launches seem to be more concerned about overall cost – smaller units with higher per sq ft (psf) prices have been selling faster than larger units with lower psf prices in some cases.

Savills’ research and consultancy associate director Priya Sengupta said tighter credit means buyers consider the affordability of units in absolute and psf terms.

‘Psf price acts as an impetus to generate interest and keenness or affinity to a certain location or a certain development, whereas quantum comes into play during the buying decision,’ Ms Sengupta said.

Based on DTZ and Savills’ studies, buyer resistance generally sets in at $1 million to $1.5 million. DTZ noted that only 16 per cent of the 4,401 caveats lodged from January to April were for units costing $1 million-plus to $1.5 million, while a mere 5 per cent were for units costing $1.5 million-plus to $2 million.

With high-end property stirring in the past few weeks, could the resistance level be on the way up? Data is not available because it takes time for caveats to be lodged and captured.

But according to Knight Frank’s director of research and consultancy Nicholas Mak: ‘It appears so because more people are exploring the market.’

Still, he laced his observation with caution: ‘This is often (due to) a bit of spillover from the stock market, which can be fairly volatile. It is also based on the expectation that the Singapore economy is going to recover year-end or so – but the government is not of the opinion.’

Announcing Singapore’s first-quarter GDP figures recently, the Trade and Industry Ministry said there are still no decisive signs of recovery.

Of course, buyer resistance is unlikely to apply as far as the ultra-rich are concerned. DTZ’s data shows 4 per cent of caveats in January to April were lodged for units worth more than $2.5 million. These include caveats for three apartments at Ardmore Park each worth more than $5 million. There were also caveats for 23 Gallop Gables units priced from $2.5 million to $4 million.

Source : Business Times – 1 Jun 2009

 

Private home sellers raise asking prices

PROPERTY market sentiment appears to have improved fast and furious, judging by the prices being asked by some individual sellers – though observers suggest they are being somewhat optimistic.

These sellers may be taking their cue from the stock market, experts said. Asking prices for some properties that have just been completed or are close to completion have jumped significantly in recent months.

The improvement follows strong data for new private home sales, which have crossed the 1,000-unit mark for three months in a row since February, after a period of severe stagnation.

Property experts said the recent strong rally in the stock market has given quite a lift to property market sentiment.

Still, lower prices have also played a part in stronger sales. Some recent launches have done well after developers finally cut their asking prices.

For instance, Parc Centennial in Kampong Java Road is now sold out, after developer EL Development relaunched the 44 remaining units at an average price of $1,175 per sq ft (psf), about 20 per cent lower than last year’s average price.

But individual sellers are tending to raise, not lower, prices. For instance, some sellers of high-floor units at Marina Bay Residences are advertising their properties at $2,000 psf or more – regarded by analysts as a key resistance level for many buyers.

Some recent classified advertisements in The Straits Times for Cosmopolitan in River Valley show asking prices of $1,380 psf to $1,395 psf, compared with asking levels of about $1,250 psf earlier in the year.

In late February, an ad for RiverGate units displayed prices of $1,118 psf to $1,399 psf. But last week, some ads for RiverGate, at Robertson Quay by the Singapore River, offered units at prices starting from $1,380 psf, with one ad even offering two three-room units at $1,900 psf.

Some sellers, with an eye to the longer term, are actually withdrawing properties from the market, sensing an uptick in sentiment. ‘We are seeing some sellers changing their minds to sell, seeing that the market is rising,’ said Savills Residential director Phylicia Ang.

HSR Property Group executive director Eric Cheng said the property market has performed beyond expectations in the past three weeks, but is starting to slow a tad as sellers retreat and wait for better prices.

A 31-year-old house-hunter, who is scouting for his first home, said two out of his three property viewing appointments near East Coast Road a week ago were cancelled almost at the last minute because the sellers decided to withdraw from the market. And over the weekend, his agent failed to get him any viewing appointments in the same area for the same reason.

Ms Ang said individual sellers face fewer risks by testing higher prices in the market. ‘If I don’t like the price, I can always withdraw,’ she said.

Still, market sentiment has moved up very fast. ‘It’s the ‘too good to be true’ scenario now,’ she said.

But one thing is for sure: There are buyers out there with cash and there is clearly demand for projects that are seen as good value, experts said.

Compared with the situation three months ago, sellers are more willing to negotiate prices today as there are more keen buyers, said Mr Cheng.

Just three days ago, a deal for a 2,150 sq ft UE Square unit in River Valley was closed nearly on the spot at slightly more than $1.8 million, as it worked out to an attractive level of below $850 psf, he said.

In general, even though there are still desperate sellers around, some sellers may be asking for about 5 per cent higher than the prices three months ago, Mr Cheng said. ‘You can see more sellers asking for a bigger premium, but no one will buy if you price your property too high. One high-price caveat does not reflect the price of the development,’ he added.

Market sentiment has improved, but it is still early days as short-term fundamentals have not exactly corrected, said PropNex chief executive Mohamed Ismail.

‘If the sellers start to increase their prices in anticipation of higher levels, they may kill the deal,’ he added. ‘We saw that in 2007 when prices were rising. Many sellers were not contented with their offers, so many deals did not materialise.’

He said sellers can ask for high prices, but the key is whether the banks are willing to match those asking prices.

‘It is no point if your own optimism is not matched by the valuation. That is the valuers’ view of the current market, taking into account the better sentiment.’

To sum up, said Mr Cheng, there are still more sellers than buyers.

Source : Business Times – Jun 2009

 

High-end property starting to move

Interest in the top end of the property market appears to be slowly picking up from near non-existent levels.

Several investors have trickled back to the resale property market, taking the chance to pick up posh apartments at prices mostly below $2,000 psf, or way below what was quoted last year.

One such unit at the 55-unit The Ladyhill that cost no less than $6.5 million has just been sold to a Korean investor.

The price for the freehold apartment works out to $1,700 per sq ft – which was the average price of the first 20 units sold at the condo’s 2000 launch.

Prior to this deal, only two caveats had been lodged for the property in the past 12 months. Both were done at higher levels – one was for a bigger unit in July last year at $2,149 psf or $9 million, and the other was for a 3,283 sq ft unit for $2,193 psf or $7.2 million last November.

Consultancy Cushman & Wakefield, which brokered the latest deal, said the volume of top-end deals is not quite there yet but interest is certainly slowly picking up.

Buyers are looking for good value, said property experts.

Resale deals are slowly being done because some sellers are more willing to be flexible and there is limited supply in the market, they said.

Developers are still lying low where top-end launches are concerned, said Savills residential director Phylicia Ang.

Indeed, few developers of high-end developments want to sell at today’s prices, said Cushman’s managing director Donald Han.

They would rather wait for the right time to launch as going to market now would require them to cut their price levels by a significant amount, he said.

Government data compiled by Cushman & Wakefield shows that six deals – each worth more than $5 million – were done last month, up from three deals in March.

It is a slight improvement from the dismal levels last November (zero deal) and December (one deal). Before the downturn got worse, such deals numbered 21 and 43 in May and June last year.

While high-end prices have not stabilised, there may not be a repeat of some very low price levels registered in recent months, experts said.

‘Just about three months ago, you could get an Ardmore II unit at less than $1,800 psf. At that time, you couldn’t see the daylight in the market,’ Ms Ang said.

Indeed, a mid-floor Ardmore II unit was sold for only $3.375 million or just $1,668 psf in February while a high-floor unit went for $3.6 million, or $1,779 psf in March, according to caveats lodged.

Caveats lodged last month show four deals done from $1,600 psf to $1,917 psf.

At the 2006 launch of Ardmore II, apartments were sold for an average price of about $2,300 psf, or between $4.2 million and $5.5 million per unit.

At the nearby 330-unit Ardmore Park - long associated with posh living – no deals were registered in the first three months of this year.

Caveats lodged show that three deals were done last month at $1,976 to $2,184 psf, below the deals of $2,635 to $2,791 psf in June and July last year.

Come the second half of the year, Mr Han said he expects to see more resale activity in the upper end of the market for deals worth $5 million and above.

Top-end launches, however, may not surface this year.

‘If you’re talking about the high-end market, as in those priced above $2,000 psf, there won’t be any launches until the market improves,’ said a consultant who declined to be named.

‘If you go above $2,000 psf today, these buyers will disappear.’

Source : Sunday Times – May 2009

Upmarket homes start to sell as momentum rises

THE high-end property market – which has remained subdued since the beginning of the year even as activity increased in the mass-market segment – started to move in April.

According to data from the Urban Redevelopment Authority (URA), some 1,207 units were sold by developers last month. And unlike in the first three months of the year, homes in Singapore’s core central region (CCR) – which includes the prime District 9, Marina Bay and Sentosa – sold as well, with transaction volumes there soaring to a 19-month high of 322 units. In contrast, only 133 homes were sold in the CCR in March.

This rebound is an encouraging sign that the high-end market is not totally void of life as feared, analysts said. Outside the CCR, some 523 homes were also sold in the mass-market outside central region in April, as well as 362 homes in the more upmarket rest of central region.

Buoyed by the performance of the mass market over two consecutive months in February and March, developers started testing the ground with launches in the mid-tier and high-end segments in April.

While just 70 units were launched in the CCR in March, the number rose almost five times to 339 units in April – the highest number since September 2007. Launches in the CCR accounted for almost one-third of all units launched in the month.

‘Developers were probably hoping to ride on the rebound in buying momentum to clear their stock and land bank,’ said Tay Huey Ying, director for research and advisory at Colliers International.

Colliers’ analysis showed that there was a significant jump in the number of new units sold in April in the range of $1,500 per square foot (psf) and above. Some 90 units were sold at above $1,500 psf in April, compared to less than 12 units a month in the preceding six months. Of note, Illuminaire on Devonshire sold all of its 72 newly launched units at a median price of $1,703 psf.

Homes in the $1,000-$1,500 psf price range also sold well. Projects with significant numbers of units sold in this price range include the 51-unit BelleRive on Keng Chin Road (where all 21 units launched in April were sold for $980-$1,404 psf) and Attitude at Kim Yam in the River Valley area (where 22 out of the 33 units launched were sold for $1,157-$1,306 psf).

However, there was still no activity in the luxury segment. April marked the fourth consecutive month with no units transacted above $2,500 psf, pointed out Nicholas Mak, Knight Frank’s director of consultancy & research. ‘Although the sale volume is showing signs of increase, price growth is still subdued,’ Mr Mak said.

Analysts said there could be a variety of reasons why the buying momentum carried on from February and March. Some 1,332 homes were sold in February, and another 1,220 in March – a huge pick-up in sales volume after just 108 homes were sold in January.

Talk that the United States and Singapore economies are recovering, combined with the recent stockmarket rally, could have injected confidence and lifted the sentiments of potential buyers, analysts said.

There is also an increasing sense among potential homebuyers that home prices could be nearing bottom, with URA’s statistics showing that private home prices chalked up their worst-ever quarterly decline of 14.1 per cent in Q1.

Developer sales for the January-April period are already about 90 per cent of all developer sales in 2008. Such launch and sales activity can be sustainable in the months ahead if the Singapore economy and employment market were to expand in 2009, said Knight Frank’s Mr Mak.

The second quarter may chalk up home sales volume of 3,000 units, said Li Hiaw Ho, executive director of CBRE Research. In Q1, 2,660 homes were sold.

Priya Sengupta, associate director of Savills’ research & consultancy unit, warned, however, that in the coming months, cautiousness is the key in developer launches as any sign of ‘false euphoria’ may scare the buyer away, leading to several months of inactivity again.

Others similarly called for ‘cautious optimism’.

There is still enough pent-up demand from homebuyers for a few more months, said Chua Yang Liang, Jones Lang LaSalle’s head of research for South-east Asia. But he added: ‘However, until there is a clear signal 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 : 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

Will property recover faster than expected?

MARKET turning points are very hard to spot. A recent example was the March 9 market bottom. Then, the world seemed a bleak place: we were in for a prolonged depression; banks were going to fail; many companies were going bankrupt and millions were going to lose their jobs and stay unemployed for years. That period also coincided with a spate of bad news from the Chinese companies listed in Singapore – the so-called S-chips. The cash wasn’t in the banks. The founders were losing control over their companies because they’d pledged their shares to financial institutions. Profit was overstated, and the companies’ status as going concerns was in question. One by one, the S-chips were getting suspended.

Under the never-ending onslaught of bad news, many investors threw in the towel and cashed out. By February, cash sitting on the sidelines was at its highest in more than 10 years. Government statistics showed that the amount of deposits of non-bank customers with domestic banking units and deposits with finance companies was equivalent to 99 per cent of the aggregate market value of all the stocks listed on the Singapore Exchange (SGX). The previous peak was in 2002, when the cash/market cap ratio was 91 per cent.

History has shown that such a high level of cash holdings portends strong upside in the equities market. The rebound did eventually come – almost out of the blue – and took many by surprise. The recovery – fuelled by sightings of ‘green shoots’ in the economy – has lasted eight weeks and equity prices have gained more than 40 per cent. But through it all, many analysts and fund managers still doubt the sustainability of the recovery.

So what do we make of the projections of most property consultants that private residential property will slump by 25-35 per cent this year? The forecasts suggest more downside for the rest of the year given that prices fell ‘only’ 14.1 per cent in the first quarter. But like the pundits in the stock market, there is a possibility that these consultants too will miss the market turning point. For one, the stock market leads the property market by 4-8 months. If the stock market remains buoyant, then there is a probability that the property market too will stabilise. And, as noted earlier, there is a lot of cash waiting to get into the market.

Already, there are signs that US real estate – the source of the current global financial crisis – is recovering. According to The New York Times, Sacramento (among the first US cities to fall victim to the real estate collapse) has seen investors and first-time buyers out in force competing for bargain-price foreclosures. Sales are up 45 per cent from last year, and the vast backlog of inventory has diminished. Progress is also visible in other hard-hit areas.

If so, one shouldn’t be too quick to dismiss the hope that the US property slump, just like the stockmarket slump, may end sooner than the doomsters think.

Source : Business 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